Due to the recent drop in jeonse prices and decreased demand for new jeonse, it has been found that reduction agreements have increased which reduce the amount of jeonse and the monthly rent when the lease is renewed.
Real estate brokerage Ziptos analyzed the effective monthly rent of the Ministry of Land, Infrastructure and Transport in the metropolitan area in Q4 2022.
He went on to explain that it was the highest since 2021, when the Ministry of Land, Infrastructure and Transport began disclosing data on contract renewals, and that it had increased more than 2.8 times in the previous three quarters.
The percentage of contracts renewed for the same amount as previous contracts also increased from Q3 to 12.9%.
In particular, the contract renewal rate for contract reductions in Gyeonggi-do apartments was significantly raised to 23.1%.
Renewal reduction contracts are popular because landlords believe it is better to sign contracts with existing contractors with lower deposits than find new tenants as the reverse fiscal crisis intensifies due to the recent increase in interest rates and decreases in jeonse prices .
Some landlords are unable to repay the deposit difference, so they pay “reverse monthly rent” to the tenant or back the tenant with interest on the jeonse loan.
YTN Lee Dong-woo ([email protected])
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