What are 3 types of rental contracts in South Korea? | Derek Lobo posted on the topic | LinkedIn (2024)

During my stay in South Korea, I'm learning about their unique approach to rental contracts.There are 3 types of rental contracts in South Korea:wolse(월세)jeonse(전세)banjeonse(반전세)Wolse:A western type of lease that most expats sign when they find a place in Korea. It involves putting down a deposit (called “key money”) and paying monthly rent. The rent is usually set, yet you can negotiate by asking to increase the key money and lower the rent. As the key money is kept in an account with interest rates, this type of negotiation is beneficial for both landlord & tenant. At the end of your stay, if no damage is done to the apartment, your key money is returned.Jeonse:Thiscontract requires the tenant put down key money that equals the price of the property, and no actual rent is paid. Usually, this means your key money will be around 200 million KRW ($170,800 USD). No rent payments are necessary as your landlord collects the interest rate for the deposit for the length of the contract (usually 2 yrs) and at the end, you get all of your deposit back.Those without a couple hundred million won can take out a bank loan for ajeonsetype of contract and pay monthly installments to the bank. These types of payments are usually lower than average rent, so both the tenant & the landlord profit. AJeonsecontract is popular among Koreans, but is rarely seen among expats, as they can't take out bank loans this size for lease purposes.Banjeonse:Banjeonse translates to half-jeonse. This contract is a mix ofwolse&jeonse,where the tenant puts down a sizable deposit and pays rent monthly. However, both the key money and monthly payments are lower. In this case, the deposit is about 100 million KRW ($85,500 USD).In general, no matter the type, most contracts last at least 2 yrs. However, if you do want to sign a 1-year lease, you may be able to negotiate with your landlord. If no new contract is drawn up 6 months prior to the end of the lease, the tenant can continue to live in the property under the same rules. Breaking your lease is permitted if you desire to leave earlier than the contract intends. However, how you go about it depends on the landlord you are dealing with.It is advisable to sort out all the documentation with your real estate agent. They will ensure nothing is missing from the paperwork and act as a witness to your deposit down payment. This will ensure you back your key money after the lease is over. Find a real estate agent in Korea that suits your needs bycontacting InterNations.Pricing and Average Rent in South Korea:In South Korea, the ratio of the monthly rent and the key money (deposit) is important. The more you put down as your key money, the lower your monthly rent installments will be.When looking through listings you'll find that both the key money and the monthly rent is noted. The first number is the key money and the second one, after the slash, indicates the monthly payments (e.g: 500/45).

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