More people are renting than signing jeonse contracts in Seoul

From January to April, 51.6 percent of the contracts were monthly rent deals as opposed to jeonse — lump-sum long-term deposit leases — according to data from the Supreme Court of Korea compiled by Jikbang.

View of apartments in Seoul on Tuesday from Lotte Tower in Jamsil. [YONHAP]

More than half of the lease contracts signed in Seoul so far this year have been for monthly rentals for the first time since the data were first compiled.

From January to April, 51.6 percent of the contracts were monthly rent deals as opposed to jeonse — lump-sum long-term deposit leases — according to data from the Supreme Court of Korea compiled by Jikbang.

It is the first time that the number of monthly rental deals was greater than jeonse contracts since 2014, when the relevant data was first compiled.

Monthly rentals were 41.0 percent of the total in 2019, 41.7 percent in 2020 to 46.0 percent in 2021.

The upward trend in the monthly rent contracts was evident in data compiled by the Ministry of Land, Infrastructure and Transport as well.

According to the ministry's monthly report on real estate transaction volumes, monthly rental deals accounted for 48.0 percent of the total lease contracts nationwide from January to March this year. That is a 5.9-percentage-point increase compared to the same period last year.

At this rate, the figure may cross the 50-percent mark in the ministry's April report, which will be released in June.

"There has been a growing preference among tenants who prefer monthly rent contracts, as the recent hikes in interest rates have increased mortgage costs, outweighing monthly rent," said a Jikbang official. "There has been an increase among landlords that also prefer monthly rentals over jeonse as they hope to pay off property taxes, which has gone up, with the monthly rents."

While monthly rents create usable cash flow, jeonse is usually deposited once.

In Seoul, tenants in their 20s and 30s were 61.7 percent of the total in the January-to-April period. The number was 52.7 percent in 2019, 55.7 percent in 2020 and 57.9 percent in 2021.

The number of tenants 50 or older had been declined from 31.8 percent in 2019 to 27.8 percent in 2021.

In the first four months of the year, the number was 23.6 percent.

This indicates that the tougher loan regulations and soaring real estate prices have driven many young people to sign monthly rental contracts as it has become difficult to find decent affordable apartments to buy.

BY KIM WON [shin.hanee@joongang.co.kr]