Last year, the proportion of monthly rent for dwellings, including apartments and townhouses, approached a record high of 60%. The transition from jeonse (Korean rental housing system characterized by lump-sum deposits) to monthly rent is accelerating due to high interest rates and the impact of jeonse fraud.
According to the Supreme Court's registration information portal on the 30th, among the total of 2,476,870 dwellings rental contracts that received a confirmed date nationwide last year, 1,428,950 were monthly rent agreements, accounting for 57.7% of all transactions.
This is the highest figure since the Supreme Court began collecting confirmed date information in 2014. The share of monthly rent for dwellings was only 40.8% until 2020, but it rose to 43.8% in 2021 and first exceeded 51.9% in 2022, accounting for half of all jeonse and monthly rent transactions. It then increased to 54.9% in 2023, surpassing 57% last year, marking a significant rise of 41.4% in just four years.
The rapid increase in the proportion of monthly rent is due to the intensified reluctance to use jeonse in the villa (townhouse and multi-unit housing) market, which emerged from the jeonse fraud issues that started in 2022.
In the villa market, the concerns over not receiving deposits back on time have led to a decline in jeonse prices, which had once approached sales prices. Tenants, worried about the return of jeonse deposits, are increasingly transitioning to monthly rent instead of reducing their deposits.
According to the Ministry of Land, Infrastructure and Transport, from January to November last year, the proportion of monthly rent for apartments was 44.2%, a slight increase compared to the 43.1% seen in 2022 when the jeonse fraud issues began. Meanwhile, the proportion for non-apartments, such as townhouses and multi-unit housing, which were significantly affected by the fraud, rose from 59.5% in 2022 to 69.5% last year, an increase of 10 percentage points.
While tenants still prefer jeonse for apartments due to the high burden of deposits, the transition to monthly rent in the villa market has accelerated due to concerns over reverse jeonse issues.
Last year, the proportion of monthly rent for dwellings by region was highest in Jeju Province at 78.5%. This means roughly 8 out of 10 rental contracts were for monthly rent. Following Jeju, Chungnam stood at 64.0%, Daejeon 63.4%, Busan 62.1%, Gyeongnam 61.9%, Ulsan 61.5%, and Seoul 60.3%.
On the other hand, Jeonnam had the lowest proportion of monthly rent at 44.5%, while Chungbuk (50.4%) and Incheon (51.6%) also had relatively low proportions.