Eased Fear of Reversed Jeonse... Tenants Prefer 'Jeonse' More Than Last Year

Zigbang Survey... Landlords Prefer Monthly Rent More

The preference for Jeonse, which had decreased last year due to base interest rate hikes and an increase in Jeonse fraud cases, has risen again this year. It is analyzed that the reduced fear of reverse Jeonse caused by the burden of fixed monthly rent expenses has increased tenants' preference for Jeonse.

View of the surrounding apartments from the observatory of 63 Building in Yeouido, Seoul. / Photo by Hyunmin Kim kimhyun81@

On the 11th, real estate platform Zigbang conducted a survey on 636 application users (including both landlords and tenants) regarding their currently preferred type of housing lease transaction (August 17?31, confidence level 95% ±3.89 percentage points). The results showed that 60.4% of respondents preferred Jeonse.

In the same survey conducted in August last year, 57.0% preferred Jeonse and 43.0% preferred monthly rent, indicating that the preference for Jeonse has increased over the past year while the preference for monthly rent has decreased accordingly.

Both Jeonse and monthly rent tenants showed an increased preference for Jeonse. In particular, among monthly rent tenants, the proportion who preferred Jeonse rose by 10.7 percentage points from 37.9% last year to 48.6% this year. Zigbang explained that this is likely due to the reduced fear of reverse Jeonse following the decline in Jeonse prices.

On the other hand, landlords showed a 17.4 percentage point higher preference for monthly rent transactions compared to last year. The most common reason was "because there is a fixed monthly rental income," accounting for 56.5%. This was followed by ▲less burden of returning the deposit at contract expiration (26.1%) ▲ability to replace burdens such as property tax with monthly rent (6.5%) ▲rental yield higher than market interest rates (4.3%) ▲others (4.3%).

Ham Young-jin, head of Zigbang Big Data Lab, said, "The response regarding the burden of returning deposits increased compared to last year," adding, "This result appears to be due to the combined effect of landlords having difficulty finding tenants and the difficulty in returning deposits caused by the decline in Jeonse prices."

For tenants, the biggest reason for preferring Jeonse was "no fixed monthly expenses to bear" (55.1%). This was followed by ▲lower interest burden on Jeonse loans compared to monthly rent (25.3%) ▲serving as a stepping stone to home ownership (8.4%) ▲variety of loan products through financial means such as Jeonse loans (6.4%).

The reasons for preferring monthly rent transactions included "less risk of losing a large sum of money due to fraud or Jeonse deposit non-return," accounting for 35.2%, followed by ▲less burden of a large lump sum (30.9%) ▲increased interest burden on Jeonse loans (13.9%) ▲possibility of short-term contracts (9.7%).

Ham said, "Although the fear of reverse Jeonse has eased and the number of tenants preferring Jeonse has increased again, monthly rent tenants still prefer monthly rent transactions due to concerns such as Jeonse fraud," adding, "It is necessary to simultaneously make efforts to secure tenants' countermeasures to protect lease deposits and to ensure transparency and safety in the transaction market to alleviate tenants' anxieties."