As the shift from jeonse to monthly rent has accelerated recently, the share of monthly rent contracts has risen sharply, especially for newly completed move-in apartments. The main reason cited is that the June 27 lending curbs last year banned jeonse loans conditional on the transfer of ownership. In some newly built apartment complexes, monthly rent accounted for more than 60% of all jeonse and monthly rent contracts.
On Mar. 8, ZIGBANG CO. analyzed Seoul apartment jeonse and monthly rent transaction records reported to the Ministry of Land, Infrastructure and Transport's actual transaction price system and was found that, after the June 27 lending curbs last year, the share of monthly rent (including key-money monthly rent) contracts at four newly occupied apartment complexes in Seoul averaged 60%.
That figure is more than 14 percentage points higher than the 45.8% share of monthly rent in all lease contracts for Seoul apartments during the same period. It is also 10 percentage points higher than the 50% monthly rent share for new contracts excluding renewals.
The high share of monthly rent at new move-in complexes is analyzed as the result of tighter jeonse loan thresholds under the government's household debt management plan and the impact of the June 27 lending curbs banning jeonse loans conditional on the transfer of ownership.
In the past, for move-in apartments, the presale contract holder, who is the landlord, often rented out the unit before receiving the transfer of ownership from the builder and paid the remaining presale balance with the tenant's jeonse deposit. Because of this, move-in apartments had a relatively high share of jeonse. However, as such jeonse loans conditional on the transfer of ownership were blocked by the June 27 curbs, more tenants are converting insufficient jeonse funds into monthly rent.
An analysis of lease contracts at four complexes in Seoul that began occupancy in the second half of 2024, before the June 27 measures, found that, in the early move-in phase, jeonse accounted for 73% of jeonse and monthly rent contracts. Monthly rent, by contrast, was only 27%. Compared with the average 43% monthly rent share for all Seoul apartment lease contracts in the second half of 2024 and the average 45% monthly rent share for new contracts, move-in complexes had a relatively lower monthly rent share.
At Bukseoul Xi Polaris in Mia-dong, Gangbuk District, which began occupancy in Aug. 2024 (1,045 households), and The Sharp Dunchon Fore in Dunchon-dong, Gangseo District, which began occupancy in Oct. of the same year (572 households), the monthly rent shares were only 27% and 28%, respectively, through December.
By contrast, at Imun I'Park Xi in Imun-dong, Dongdaemun District, where occupancy began in Nov. last year after the June 27 curbs took effect (4,321 households), monthly rent contracts reached 69%. Also, at Lacerbo Prugio Summit in Haengdang-dong, Seongdong District, which began occupancy in July last year (958 households), the monthly rent share was 58%.
At Maple Xi in Jamwon-dong, Seocho District (3,307 households), where jeonse and monthly rent contracts and occupancy began before and after the June 27 curbs, the monthly rent share in jeonse and monthly rent contracts was 39% (jeonse 61%) before the curbs, but after the lending curbs took effect, the monthly rent share rose to 43% through the end of August, the designated move-in period, and to 60% from September through the end of last year.