60% of New Apartments in Seoul Opt for Monthly Rent Over Jeonse

Impact of the June 27 Regulation on Conditional Jeonse Loans Before Ownership Transfer

The trend of "monthly rent preference" is rapidly spreading in the rental market for newly built apartments in Seoul. Due to the government's policy of tightening household debt management, the threshold for securing jeonse (lump-sum deposit lease) loans has risen. In addition, even the loan methods that were commonly used during the move-in process for new apartments have been blocked, resulting in 6 out of 10 households choosing monthly rent (including semi-jeonse) over traditional jeonse arrangements.

On February 26, when apartment prices in the three Gangnam districts of Seoul (Seocho, Gangnam, Songpa) and Yongsan-gu began to decline, a view from the Namsan Observatory in Seoul showed apartment complexes densely packed across the city. Photo by Yonhap News

According to an analysis by Zigbang, a real estate platform, and Yonhap News based on data from the Ministry of Land, Infrastructure and Transport's actual transaction price system on March 8, the proportion of monthly rent (including guaranteed monthly rent) contracts for four major newly built apartment complexes in Seoul that began occupancy after the "June 27 Loan Regulations" last year averaged 60 percent. This figure is significantly higher than the proportion of monthly rent contracts for all apartments in Seoul during the same period, which stood at 45.8 percent.

Even compared to the 50 percent share of monthly rent contracts among new (non-renewal) leases, this is 10 percentage points higher.

The primary reason for the sharp increase in monthly rent contracts in newly built apartments is the government's complete ban on "conditional jeonse loans based on transfer of ownership" through the "June 27 Loan Regulations."

In the past, for new apartment move-ins, it was common practice for the developer (the original owner) to rent out the apartment before the official transfer of ownership, using the tenant's jeonse deposit to pay the remaining balance of the sales price.

For this reason, new apartment complexes traditionally had a higher proportion of jeonse contracts. However, the June 27 regulations blocked these conditional jeonse loans, leading landlords to convert the insufficient jeonse deposits into monthly rent arrangements instead.

The difference before and after the regulations is clear. For example, at Bukseoul Jaipolaris in Mia-dong, Gangbuk-gu, and The Sharp Dunchon Foret in Dunchon-dong, Gangdong-gu, which began occupancy in the second half of 2024 before the regulations took effect, the proportion of monthly rent contracts was only around 27 to 28 percent.

In contrast, after the June 27 regulations, Imun IPark Xi in Imun-dong, Dongdaemun-gu, which began occupancy in November last year, saw the proportion of monthly rent contracts soar to 69 percent. Lacherbo Prugio Summit in Haengdang-dong, Seongdong-gu, which began occupancy in July last year, also recorded a 58 percent share.

Maple Xi in Jamwon-dong, Seocho-gu (3,307 units), where lease contracts and move-ins began before and after the June 27 regulations, also shows this trend. Before the implementation, monthly rent contracts accounted for 39 percent (with jeonse at 61 percent). After the loan regulations took effect, the share of monthly rent contracts rose to 43 percent by the end of August (the designated move-in period), and then further increased to 60 percent from September through the end of last year.

This content was produced with the assistance of AI translation services.