Seoul's jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) prices are rising rapidly, widening the gap between renewal contracts and new contracts at a fast pace. When tenants exercise their contract renewal rights, rent increases are capped at 5 percent. New contracts, however, reflect market rates, creating jeonse price differences of more than 700 million won even within the same complex and unit type. Amid falling new housing supply, the "dual pricing" phenomenon in jeonse contracts is expected to accelerate.
According to local brokerages on Tuesday, the 84-square-meter unit at Acro River Park in Banpo-dong, Seocho-gu, signed a new jeonse contract this month at 2.4 billion won, while a contract using the renewal right in April was concluded at 1.68 billion won. The 58-square-meter unit at Sanggye Jugong Complex 10 in Sanggye-dong, Nowon-gu, set a record high this month as two new jeonse contracts were signed at 360 million won each. By contrast, renewal contracts in the same month were concluded at 230 million won and 250 million won, respectively. The head of a licensed real estate agency in Sanggye-dong said, "There are so few jeonse listings that new contracts are priced at whatever the landlord asks. With demand concentrating, there have been cases where the asking price was raised by 20 million won before the deal was closed."
