Due to the Reverse Jeonse Crisis... Number of Tenants Using the 'Renewal Request Right' for Jeonse and Wolse Halved

Record Low Renewal Demand Rights in the Capital Area Last December
47% Decrease Compared to the Same Month Last Year
Sharp Increase in Reduced Rent Renewal Contracts

[Asia Economy Reporter Minyoung Kim] As jeonse prices have fallen, the number of tenants using the contract renewal request right has sharply decreased. Additionally, the proportion of contracts with reduced prices compared to previous contracts has significantly increased among those using the renewal request right.

According to an analysis by real estate brokerage firm Jiptos of the Ministry of Land, Infrastructure and Transport's actual transaction prices for jeonse and monthly rent in the Seoul metropolitan area including Seoul, Gyeonggi, and Incheon, the number of contracts using the contract renewal request right in December last year was 6,574. This accounts for about 36% of all renewal contracts. It decreased by 47% compared to the same period last year, marking an all-time low. This appears to be because, amid the 'reverse jeonse crisis,' tenants who want to renew are reaching smooth agreements with landlords without using the renewal request right.

Looking at contracts using the contract renewal request right, many cases involved signing contracts with jeonse prices lower than the previous contract amount. According to Jiptos, among renewal contracts using the contract renewal request right in December last year, 1,481 contracts had reduced jeonse prices compared to before. This is more than 19 times the 19 cases in the same period the previous year, accounting for about 32% of the total.

Renewal contracts that changed jeonse to monthly rent while renewing lease contracts also increased. In the second half of last year, 5,971 renewal contracts in the metropolitan area changed from jeonse to monthly rent, a 67% increase compared to 3,572 cases in the same period the previous year.

Jin Tae-in, head of the apartment brokerage team at Jiptos, said, "With rising interest rates increasing loan burdens, tenants are looking for relatively cheaper properties," adding, "Some landlords reduce jeonse prices or support tenants' loan interest payments."