Long-term jeonse rents surge in Seoul amid tax hikes and supply glut

2018.07.10 14:32:24 | 2018.07.10 15:02:03

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Long-term home lease referred to as jeonse in Korea has surged in the first half to take up more than 70 percent of total apartment rent agreements, the biggest share in four years, as landlords preferred longer-term tenants to ride on higher interest rates and compete against temporary surge in supplies.

According to data registered at a Seoul real estate information website as of Tuesday, 64,186 apartment contracts, or 71.6 percent of total 89,587 lease deals in Seoul were made under long-term lease conditions.

Jeonse is a unique real estate arrangement in Korea where tenants live for two or more years after paying the lump sum deposit, which must be returned upon the end of the term.

Long-term lease fell below 70 percent since 2015, falling as low as 63.3 percent in the first half of 2016 as landlords found keeping the money at banks unprofitable with the interest rate at record-low levels. Monthly rents at one time peaked at a ratio of 37 percent.

The surge in new apartments in satellite cities and dumping of homes by multiple homeowners ahead of the planned hike in property ownership tax increased the supplies of long-term basis rents, the site said.

By Chung Soon-woo and Lee Ha-yeon

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