Renting a residence is the most common, and frequently only option, for international residents. Called 월세 (月貰, wolse) in Korean, a deposit is given and then monthly rent is paid to the landlord on a predetermined day. The term “key money” is frequently used instead of “deposit.” Deposit and rent price are displayed on housing websites, specialty smartphone apps, and in the windows of real estate offices (부동산, 不動産, budongsan). Despite the price being set, negotiation is sometimes possible. A common negotiation is paying a higher deposit for a lower monthly rent. This is easier to do when banks offer higher interest rates as the deposit is placed into a bank and the interest is collected by the landlord.
A rare version of monthly rent is paying your rent in advance for the entire length of your stay. Before moving in, your deposit and all rent payments are given to the landlord. Each month’s rent is subtracted for the lump sum. Upon completion of the contract the remaining deposit is returned. As this requires a substantial deposit, and rent doesn’t come back to the renter, people with this much money usually opt for a “jeonse” arrangement instead.
The jeonse system (전세, 傳貰) involves putting a deposit roughly the price of the property. Such a large deposit is provided that no rent is paid and the deposit is returned to the renter at the end of a two-year contract. As most people don’t have 200,000,000 won (roughly 200,000 USD or 200,000 Euro) or more in cash for a deposit, some or all of the deposit is borrowed from a bank. The interest payments to the bank are significantly less than one would pay for normal rent, say monthly 200,000 won to a bank instead of 450,000 to a landlord in rent. This system is advantageous as your “rent” is to the bank, is smaller than normal rent, and your deposit is returned to you at the end of the contract period, again, usually two years. The landlord makes money on this arrangement via interest payments on your deposit in a locked two-year savings account. The large deposit also protects the property owner from financial losses due to potential damage that occur at the hands of a renter.
While this is the preferred method for Koreans, it is nearly impossible for international individuals to do as banks have a higher risk involved with foreign nationals. Unless you are able to put up collateral worth the price of the loan, the banks will decline your request for a jeonse loan.
As interest rates in banks remain low, landlords are wanting to do the jeonse system less than decades prior as the rate of return has diminished. In recent years the 반전세 (반傳貰, banjeonse), or literally “half jeonse” system has emerged. This is basically a low monthly rent system with substantial deposit; roughly half of a normal jeonse deposit. Cheaper than a normal rented property, the landlord can collect both rent and interest off of the large deposit given.
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