By Lee Hyo-sik
Many tenants are expected to have a harder time finding affordable housing next month, a peak season when many renew leases and newly-weds look for houses to live in after spring weddings. The reconstruction of many old apartment complexes in Seoul will further boost rental housing demand and prices.
According to online real estate information provider Real Today Tuesday, “jeonse” contracts for a total of 111,437 apartments and detached houses in Seoul will expire this year, with nearly 60,000 running out in the first six months of the year. Jeonse is a lease system in which a tenant pays a large lump-sum deposit for typically a two-year rental period. At the end of the contract, the landlord returns the full amount with the interest earned considered rent.
By month, 11,253 rental contracts will end in February, followed by 11,260 in January and 10,952 in March.
According to data from KB Kookmin Bank, apartment jeonse prices have increased at the steepest pace in February for the past 27 years. In Seoul, rental costs jumped 2.6 percent in February 2012 from a year earlier, followed by 2 percent in September and 1.7 percent in March.
``February tends to be the busiest month for both landlords and tenants because a large portion of jeonse contracts expire,’’ said an analyst at Real Today. ``This is in line with the large volume of jeonse transactions. Many new contracts are signed and existing ones are renewed.’’
Jeonse transactions totaled 11,908 in February last year, the largest monthly volume for 2012, followed by 10,771 in March.
``Ahead of the beginning of the new school year in late February, many parents look for rental housing near good schools. Additionally, couples sign jeonse contrasts one or two months before their wedding ceremonies in April or May,’’ the analyst said. ``This time, the jeonse demand will be much higher as thousands of people are moving out of old apartment complexes in Seoul.’’
Many old apartments, particularly in southern Seoul, will be under reconstruction from late February, meaning tenants will have to find new homes, further boosting jeonse prices.