The number of relatively affordable “jeonse” apartment rentals in Seoul has decreased in the past couple of years, as rent prices have escalated despite government measures to prevent this, data showed Monday. A jeonse rental involves a large lump-sum deposit but no monthly rental payments on a two-year lease.
According to data released by the office of Rep. Kim Sang-hoon, jeonse rentals of 400 million won ($344,000) or under accounted for 46 percent of the long-term leasing market in August -- down from 59 percent in May 2017, when President Moon Jae-in took office.
The proportion remained above 50 percent until December last year, but dropped below the 50 percent threshold in January and has been on a downward trend ever since.
Among the 25 administrative districts in Seoul, Jongno-gu saw the rate decline the most during the cited period -- from 52.5 percent to 23.2 percent.
Apartments with jeonse price tags of over 600 million won, on the other hand, increased from 16.2 percent of the total to 24 percent. Those requiring deposits of more than 900 million won amounted to 9 percent, up from 5 percent.
The lawmaker said the government’s strict property regulations, aimed at curbing skyrocketing housing prices, have had the opposite effect. The new rules allow tenants to unilaterally extend an initial two-year lease for another two years. They also place a cap of 5 percent on the increase that a landlord can impose when renewing a jeonse contract. To compensate, landlords have significantly raised jeonse prices for initial contracts with new tenants, according to Kim from the main opposition People Power Party.
“Although the current administration pledged to curb rising housing prices, its regulations have hiked up jeonse prices. This is likely to affect average citizens the most,” said Kim, calling for a swift change to the government’s real estate policy direction.
By Kim Young-won (email@example.com)