A view of downtown Seoul from the Seoul Sky Observatory, Lotte Tower, Songpa-gu, Seoul, showing the residential forms of citizens. / Reporter Lee Jun-heon
Monthly rental transaction volume for apartments in Seoul hit an all-time high. It is interpreted that the number of tenants choosing to rent monthly is increasing due to the surge in Jeonse prices, stricter regulations on Jeonse loan, and the burden of holding tax.
If you look at the Seoul Real Estate Information Plaza on the 21st, the number of apartment rental transactions with monthly rents, such as reverse rent, in Seoul from this year to the 20th was 56,169. As of January-November, the monthly rental transaction volume (54,965 transactions), which was the previous high last year, has already exceeded the previous high, recording the highest level since statistics were collected in 2011.
Lease contracts are classified into Jeonse, monthly rental, quasi-wolse, and quasi-jeonse. Monthly rent refers to a rental transaction in which the deposit is less than 12 months’ worth of monthly rent, quasi-monthly rent refers to a transaction in which the deposit is 12 to 40 months, and quasi-jeonse refers to a transaction in which the deposit exceeds 240 months’ monthly rent.
As of January to November, the total monthly rental transaction volume remained at 25,000 units from 2011 to 2012, then increased to 30,000 units from 2013 to 2014 and to 40,000 units from 2015 to 2019. The number exceeded 50,000 for the first time last year, and the rate of increase has accelerated until this year.
The share of monthly rent has also increased. The proportion of monthly rental transactions among rental contracts signed between January and November this year reached 36.4%, exceeding the record high of 34.7% in 2016 during the same period. Jeonse prices have risen sharply since the enforcement of the new lease law last year, and the recent inflow of tenants into the monthly rental market is attributed to restrictions on jeonse loans due to measures to strengthen household debt management.
As the demand for rent increases, so does the price. According to statistics from the Korea Real Estate Agency, the average monthly rent for an apartment in Seoul recorded 1234,000 won last month, up 10.2% (114,000 won) from last October (1.12 million won) a year ago. The average monthly rent nationwide was 802,000 won last month, a 12.5% increase from a year ago (713,000 won).
The phenomenon in which landlords, who have increased the burden of ownership tax, such as general real estate tax (special property tax), are passing on the tax burden to tenants by turning the jeonse into monthly rent to increase the rent is also intensifying. In the Gangnam area, where the tax burden is relatively high, Songpa-gu (0.26% in August → 0.54% in September → 0.73% in October) and Seocho-gu (0.30% in August → 0.46% in September → 0.63% in October) have a large increase since last September. It ranked first and second in the monthly rent increase rate.
Park Won-gap, senior real estate expert at KB Kookmin Bank, said, “In areas where high-priced housing is concentrated, monthly rent will accelerate with the idea of receiving monthly rent and paying the monthly rent. Ham Young-jin, head of Big Data Lab, said, “If we see that there will be an increase in the ownership tax next year, as monthly rent is being transferred to Cebu, the number of transactions involving monthly rent, such as quasi-jeonse, may increase.”