When renting a room in Korea, there are two typical ways of paying your rent: monthly rent and Jeonse. You may be unfamiliar with the term Jeonse. Jeonse is a real estate jargon unique to South Korea that refers to the way apartments are leased.
(Monthly payment + Deposit)
|-Pay a deposit to the landlord before moving in|
-Pay monthly rent on a specified date each month.
-The deposit can be decreased by increasing the monthly payment.
|-Pay a large sum of deposit instead of paying monthly rent|
-The deposit is returned to the tenant at the end of the contract
-Only pay the maintenance fee and utility expenses
For foreigners who prefer short-term contracts or have a low budget, monthly rent is the best option.
What if you found a room you really like, but your budget cannot cover the rent for the room? Usually, monthly payments and deposits are negotiable.
As mentioned in the table above, a deposit can be decreased if the monthly rent is increased. How is this possible? Simply, raising the deposit by 1,000,000KRW is equivalent to reducing monthly rent by 10,000KRW. This is possible because a landlord can collect interest from the money deposited in the bank instead. In this way, you are able to negotiate the rent for the room.
Deposit 5,000,000KRW, monthly rent 400,000KRW
→ Deposit 10,000,000KRW, monthly rent 350,000KRW
When a deposit is increased to 10,000,000KRW, the monthly payment is reduced.
However, landlords tend not to prefer raising the deposit as the bank interest rates are very low these days. It all depends on landlords’ preferences.