To keep living in the same home, you have to pay 200 million won more. That is what Money Today reported on the 22nd after comparing the Korea Real Estate Board's weekly apartment jeonse price index in two-year blocks, the length of a lease term. Seoul apartment jeonse prices fell 10.35% from October 2022 to October 2024, but over the following two years, through October of this year, they rose 13.04%. Two years ago there was room to adjust the deposit downward to match falling prices; now the positions have reversed, and tenants must come up with extra money to match the rise.
The examples in the article make it tangible. An 84.9㎡ unit in an apartment complex in Junggye-dong, Nowon-gu, was re-contracted in August with the deposit raised from 577.5 million won to 800 million won. That is an increase of 222.5 million won, or 38.5%. By contrast, a 59㎡ unit in Yongdu-dong, Dongdaemun-gu, was renewed with the deposit raised from 630 million won to 661.5 million won. Exactly 5%. In Jamsil-dong, Songpa-gu, a contract emerged that kept the deposit at 1.15 billion won but added a new monthly rent of 400,000 won.
Same city, same jeonse re-contract, yet one home gets 5% and another 38.5%. The difference is made not by the landlord's temperament but by the law.
1. When Does the 5% Cap Apply?
A. Within 5% only when the renewal right is exercised
Article 6-3(1) of the Housing Lease Protection Act provides that if a tenant requests renewal of the contract between six months and two months before the lease term ends, the landlord may not refuse without a justifiable reason. Under paragraph (2) of the same Article, this right may be exercised only once, and the renewed term is deemed to be two years. Rent and deposit may be increased only within the limits of Article 7, and the cap set by Article 7(2) is one-twentieth of the agreed amount, that is, 5%. Article 7(1) also provides that no further increase may be demanded within one year of the contract or of a previous increase. The 5% renewal in Yongdu-dong is exactly this provision at work.
B. A re-contract after the renewal right has been used is different
Once the right has been exercised and another two years pass to the next expiry, the tenant has no card left to play. What happens then if the landlord asks for an increase to market price? The Supreme Court made clear long ago the scope within which the increase limit of Article 7 applies.
Supreme Court Decision 2002Da23482, June 28, 2002
The increase limit under Article 7 of the Housing Lease Protection Act applies only where one party demands an increase or decrease of rent or the like while the lease contract is in force; it does not apply where a re-contract is concluded after the lease has ended, or where, even before the lease ends, the rent or the like is increased by agreement of the parties.
This means there is no 5% cap on a new re-contract concluded after the lease ends, nor on an increase agreed by both sides. That is why the 38.5% increase in Junggye-dong does not violate the law. The renewal right is only a two-year buffer, and once those two years pass, the gap with the market price comes back all at once.
C. Implied renewal if nothing is said
There is a third route to renewal. Article 6(1) provides that if the landlord gives no notice of refusal to renew or of changed terms between six months and two months before expiry, and the tenant gives no notice by two months before expiry, the lease is deemed renewed for two years on the same terms as before. Under Article 6-2, a contract renewed in this implied way may be terminated by the tenant at any time, and the termination takes effect three months after the landlord receives the notice. Article 6, which governs implied renewal, and Article 6-3, which governs the renewal right, are separate provisions.
2. "I Am Moving In Myself": How Far Does That Refusal Go?
A. The burden of proof lies with the landlord
Among the grounds on which a landlord may refuse a renewal request, the most frequently invoked is Article 6-3(1)8, where the landlord or the landlord's lineal ascendant or descendant intends to actually reside in the home. It looks like a ground that works simply by being stated, but the Supreme Court did not see it that way.
Supreme Court Decision 2022Da279795, December 7, 2023
The burden of proving that the landlord falls under the case of intending to actually reside in the leased home lies with the landlord; an intention to actually reside is not established merely by the fact that it was expressed, and it is determined comprehensively in light of the landlord's housing situation, the family's workplaces and schools, the circumstances before and after the refusal, any words or conduct inconsistent with that intention, and whether preparations for moving were made.
In that case, the landlord refused renewal of an apartment with a 630 million won deposit, saying family members would move in, and the lower court found the refusal lawful on the ground that the stated intention was plausible. The Supreme Court reversed, holding that the lower court had misunderstood the legal principles on the burden of proof. When a dispute arises over whether the intention to reside is genuine, it is the landlord who must put forward convincing circumstances.
B. A new owner who buys the home can also refuse
Supreme Court Decision 2021Da266631, December 1, 2022, held that even after a tenant has requested renewal, a transferee who has succeeded to the landlord's position may refuse renewal on owner-occupancy grounds, provided it is within the refusal period under Article 6(1). The mere fact that the tenant made the request first does not block the new owner's right to refuse. Even then, however, the refusal must be made between six months and two months before expiry.
C. Damages for a false claim of owner-occupancy
If a landlord pushes the tenant out on owner-occupancy grounds and then leases the home to someone else, Article 6-3(5) applies. If, without justifiable reason, the landlord leases the home to a third party before the period that would have been renewed has expired, the landlord must compensate the tenant for the loss. Under paragraph (6), the amount is the greatest of three figures: three months' worth of the converted monthly rent at the time of refusal, two years' worth of the difference between that rent and the converted monthly rent received from the new tenant, and the actual loss.
3. How to Calculate a Proposal to Switch to Monthly Rent
More and more tenants who find it hard to raise additional deposit are being offered the option of paying the increase as monthly rent. Here too, the law sets the numbers. Article 7-2 provides that when all or part of a deposit is converted to monthly rent, the amount may not exceed the converted sum multiplied by the lower of 10% per year and the rate obtained by adding 2% per year to the Bank of Korea base rate, and Article 9 of the Enforcement Decree fixes those figures. If the base rate is 3% per year, the ceiling on the conversion rate is 5% per year, and converting a 100 million won deposit to monthly rent yields a limit of a little over 410,000 won per month.
A distinction must be drawn. Adding new monthly rent while keeping the deposit unchanged, in the course of exercising the renewal right, is not a "conversion" but an "increase." In that case the total rent, deposit and monthly rent combined, must stay within 5%. In a re-contract after the renewal right has been used up, there is no cap on increases, but the conversion rate limit still applies to the portion of the deposit that is converted to monthly rent. And Article 10-2 provides that a tenant may claim the return of rent and deposit paid in excess of the increase ratio under Article 7 or the calculation rate under Article 7-2.
4. What a Tenant Approaching Expiry Should Do Now
A. Look at the calendar first
The period from six months to two months before expiry is when everything is decided. If the renewal right remains, make the request within this period by a method that leaves a record, such as a text message or a certified letter. The landlord's notice of refusal or of changed terms must also arrive within this period to be effective, and if no notice comes before the two-month mark, the lease passes into implied renewal. Keeping dated records comes first.
B. Work it out in numbers
Before accepting the amount the landlord proposes, calculate three things: whether the renewal right remains; if so, whether the increase, deposit and monthly rent combined, is within 5%; and whether the portion converted to monthly rent is within the conversion rate ceiling. If you re-contracted with a higher deposit, remember also that you must obtain a new fixed-date stamp for the increased portion in order to secure priority for repayment of that portion.
C. If you have received an owner-occupancy refusal
Get the ground for refusal in writing. Ask who is to move in and when, and keep the answer on record. Even after moving out, check whether the home has been put back on the rental market. If you confirm that it was leased to a third party within the two years that would have been renewed, you can claim damages, and any contradiction between the answer given at the time of refusal and what happened afterward becomes evidence that the intention to reside was not genuine.
5. Closing
The renewal right gives tenants two years of time, but it does not eliminate the gap with the market price. When an upswing lasts, that gap comes back all at once two years later, and that is what is now appearing in the form of "200 million won increases" and "added monthly rent." Tenants need to know where the law's protection ends and negotiation begins in order to limit their losses, and landlords, too, need to know the burden of proof for an owner-occupancy refusal and the compensation rules for a false claim of residence if they want to avoid trouble later. Both sides knowing the numbers the law sets is the fastest way to reduce disputes.
(Shin Dong-woo, Managing Partner, DAEON Law Firm)
Photo: Image Catalog, CC0 Public Domain (Flickr/Openverse)
2026. 10. 24. · By Attorney Dongwoo Shin
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