"Jeonse...Not Your Usual Rental Contract." Top 5 Page for this destination South Korea Local Custom Tip by jburron

'Regular' rental contracts are becoming more popular in Korea (especially Seoul) but most are still based on the Jeon-se system.

Jeon-se involves the renter putting up about 50% of the market value of the home (apartment, usually) with the owner. The owner then must pay back that sum at the end of the contract (often 2 years; usually a 1 year minimum). The renter does not pay rent, but instead gives up the opportunity cost on the money (Korean interest rates are higher than in the West by about 1-2%) and if the property appreciates by the time the contract ends the renter will have to put up more money to stay in the place (and vice versa).

Some officetels (read: small apartments of about 300-400 sqft) have a combination: rent may be $500 a month and the deposit may be $5,000.

As mentioned, others are pure rentals (minimal deposit) but that is usually only in special locations where foreigners frequent (near Itaewon, usually).