“Lease Act Renewal of Jeonse Contract Seoul Apartment Needs 120 Million Won for Renewal”

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picture explanationSeoul apartment complex seen from 63 Square in Yeouido

According to an analysis, an average of 120 million won is required to renew the contract for an apartment that has renewed its jeonse contract in Seoul through a two-year contract renewal application right and a 5% price ceiling system.

According to the Real Estate R114 Labs (REP) market price survey on the 21st, from July 31, 2020, when the right to apply for contract renewal and the monthly rent cap system were enforced, the average rate of increase in the nationwide Jeonse price reached 27.69%.

If the lessee renews the contract using the 5% limit on the monthly rent during this period, it means that from July 31, when the new contract is converted, the increase in the market price (about 22% point difference) must be prepared in advance.

During the same period, the rate of increase in Jeonset prices by region was highest in Gyeonggi-do 32.98%, Incheon 32.77%, Chungbuk 30.64%, Daejeon 28.29%, Gyeongnam 26.69%, and Seoul 26.66%.

Ji-hae Yoon, senior researcher at Real Estate R114, said, “Usually, the landlord and tenant discuss whether to renew the lease three months before the expiration date. explained.

On the other hand, Jeonnam (1.92%), Gwangju (10.77%), Daegu (11.69%), Jeju (13.13%), and Gangwon (13.53%) showed relatively low rates of increase in jeonset prices.

The rate of increase in Jeonse prices by region after the new lease law was enforced

picture explanationThe rate of increase in Jeonse prices by region after the new lease law was enforced

At the time of the enforcement of the Lease 2 Act on July 31, 2020 (the right to apply for renewal of the contract, the limit on the monthly rent), the average jeonse price per household nationwide was 39.97 million won.

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As of the 20th, the average jeonse price per household in the country was 479 million won, and the price gap between the contract renewal and the current market price is 75.32 million won.

However, this varies widely by region.

In Seoul, an average increase of 126.5 million won in Jeonse price is expected when apartments re-contracted under the upper limit are converted into new ones.

Gyeonggi was also higher than the national average at 89.71 million won.

Incheon (72.53 million won), Daejeon (53.46 million won), Sejong (51.86 million won), Busan (46.83 million won), Chungnam (39.1 million won), Gyeongnam (36.35 million won), Chungbuk (35,27 million won), and so on.

However, this is an average increase, and depending on the individual complex, area, and type, the increase experienced by the lessee may be felt two to three times larger.

In particular, in the case of Seoul, where the jeonse price instability is the greatest, the number of apartment occupants will decrease to 60% of the first half (13,826 households) in the second half of this year (8,326 households).

Senior Researcher Yoon said, “With about two months left before the expiration of the two-year contract renewal application period, the new government will promote differentiated policies, such as preferential tax treatment for ‘good lessors’, which apply a lower rent than the market price according to unrest in individual regions. It is necessary,” he suggested.

Comparison of changes in the Jeonse price per household by region after the new lease law was enforced

picture explanationComparison of changes in the Jeonse price per household by region after the new lease law was enforced

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