Korean Rental Contracts Explained (How Much Deposit Do I Need?)

If you’re thinking of living in Korea (short-term or long-term), finding a place to live is one of the first tasks that you have to do.

You’ll either buy or rent a house. Today, to get you prepared, we will explain how ‘rental contracts’ work in Korea.

Korea has three types of rental contracts:

1️⃣ 월세 (wol-se)

2️⃣ 전세 (jeon-se)

3️⃣ 반전세 (ban-jeon-se)

월세 (Monthly rent; ‘wol-se’)

  • A tenant pays the deposit to a landlord when the contract starts and pays rent on a monthly basis until the contract ends.
  • The deposit is returned to the tenant when the contract ends.
  • The rental contracts are usually made for 1 or 2 years.
  • The ratio of 월세 transactions in Seoul was 51.6% last year.

☑️ How much deposit do I need?

If you’re looking for a decent quality house in Seoul, you have to pay at least 10,000,000 KRW (≈8,086 USD). The price usually goes up by 10 million (10mil, 20mil, 30mil, and so on). The higher the deposit, the lower the monthly rent.

If you’re thinking of regions other than the Seoul metropolitan area, a deposit can go down to 5,000,000 KRW (≈4,043 USD).

☑️ How much is the rent?

That really depends on the region, the size and condition of a house, and the surrounding facilities. 

But if you’re looking for an officetel (studio apartment) located in the center of Seoul with easy access to the subway and bus, you’ll need at least a 10,000,000 KRW deposit and 700,000 KRW monthly rent (and the place can be tiny).

전세 (Lump-sum deposit; ‘jeon-se’)

  • A unique rental system where a tenant pays a lump-sum deposit to a landlord when first entering the house and doesn’t pay monthly rent.
  • When the rental contract ends, the deposit is returned to the tenant. 
  • The rental contracts are usually made for 2 years.
  • The ratio of 전세 transactions in Seoul was 48.4% last year.

☑️ How much deposit do I need?

The deposit is usually 60~80% of the value of the house (sale price). It’s fully refunded when the contract ends.

☑️ What’s the average?

The average 전세 of officetels in the Seoul metropolitan area was about 216,510,000 KRW (≈175,079 USD) last year.

The average 전세 of apartments in Seoul was about 675,700,000 KRW (≈546,342 USD) last year.

People usually get loans from the bank and pay the interest as it’s usually cheaper than what the monthly rent would be. But the price of a deposit has risen dramatically in recent years. It’s almost impossible for those who have just graduated from college or newlyweds to get 전세 without their parents’ help.

반전세 (Half deposit; ‘ban-jeon-se’)

  • A deposit is combined with a monthly rent. It’s in-between 월세 (monthly rent) and 전세 (lump-sum deposit). A deposit is a bit cheaper than 전세 and the monthly fee is a bit cheaper than 월세.
  • It’s a contract in which part of a lump-sum deposit is transferred to monthly rent according to a certain percentage.
  • The rental contracts are usually made for 2 years.

What if someone can’t afford that much deposit? Is there any other place where one can live?

Yes there are! We’ll explain them next time 🙂

고시원 (gosiwon)

코리빙 스페이스 (co-living spaces)

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