[News Terms] Burden of Jeonse and Wolse... Introduction of 'Juse'

Rising Demand from Youth Unable to Prepare Deposit
Concerns Over Jeonse Fraud Amid Soaring Loan Interest
One of Various Lease Methods in a Period of Interest Rate Hikes

A densely populated area of multi-family housing in Seoul. [Image source=Yonhap News]

[Asia Economy Reporter Han Seung-gon] Recently, a new rental system called 'Juse (週貰)', where there is no deposit at all or rent is paid weekly, has appeared in the central Seoul area. Juse is gaining attention among young people who find the interest on deposit loans burdensome due to the rapid rise in interest rates.

Juse is an ultra-short-term lease product, where tenants contract for the desired period on a weekly basis and pay the landlord every week. It is similar to existing short-term rental systems but differs in that the contract period is shorter and the deposit is as low as a monthly rent or sometimes nonexistent. For convenience, payments are sometimes grouped on a monthly basis.

Juse rental systems have already been widely adopted overseas in countries like the United States, the United Kingdom, and Japan, where the Jeonse (key money deposit) system does not exist. However, during periods of rising rent, tenants' housing costs can increase sharply with Juse, making it difficult to save a lump sum.

As a result, it is known that single-person households among young people who want to move easily and without burden to other areas and can terminate contracts anytime are actively seeking Juse. From the landlord's perspective, receiving Juse does not cause losses either. They can prevent losses by raising the monthly rent to cover costs such as interest and property taxes.

Given this situation, platform companies that mediate weekly housing contracts have even emerged. Checking the Juse price range on one application (app) in the Gangnam-gu area of Seoul, an officetel near Hakdong Station was priced at 450,000 KRW per week, around Daechi-dong at 460,000 KRW, and a one-room apartment in Samseong-dong was priced at 830,000 KRW per week. Although this is a heavy burden for a one-room officetel, it is fully furnished with beds, furniture, and other full options, making it popular among young people.

Experts explain that Juse is one of various rental methods that can emerge during the process of decreasing Jeonse and increasing monthly rent due to rising interest rates. They interpret that other rental formats can also appear. In fact, there are reports of properties converted from goshiwons (small dormitory rooms) or guesthouses being rented out.

Juse is expected to continue attracting interest among young people for the time being, as interest rates rise and complaints related to Jeonse deposits increase. The Bank of Korea's Monetary Policy Committee raised the base interest rate from 0.5% per annum in August 2021 to 3.25% last November, a 2.75 percentage point increase, causing a sharp rise in interest on Jeonse and monthly rent deposit loans. The number of tenants in Seoul who visited courts due to failure to recover Jeonse or monthly rent deposits reached a record high. According to the Supreme Court's Registry Information Plaza, the number of applications for tenant registration orders in Seoul from January to November 2022 was 3,719, a 25.9% increase compared to 2,954 in the same period in 2021.