When a Korean landlord proposes converting jeonse into part-monthly rent, it's hard to judge whether the offer is fair. They'll lower the deposit and add a monthly payment — but by how much should each move?
One number governs it: the conversion rate. Enter the deposits and rate to get the fair monthly rent, and see whether borrowing to keep jeonse beats paying rent.
Calculates automatically. Rent = (converted deposit × rate) ÷ 12. The legal cap is the lower of base rate + 2%p and 10% (Housing Lease Protection Act art. 7-2); the base rate changes, so check it at contract time. The loan comparison uses interest only and is indicative.
The formula
Monthly rent = (jeonse deposit − retained deposit) × conversion rate ÷ 12
With the defaults — ₩300M jeonse, keeping ₩100M, converting ₩200M at 4.5% — that's ₩9M a year, or ₩750,000 a month.
To go the other way, converted deposit = rent × 12 ÷ rate. Rent of ₩750,000 at 4.5% equals ₩200M of deposit.
The legal cap — and when it applies
| Legal cap | Lower of base rate + 2%p and 10% |
| 2026 basis | Base rate 2.5% → cap 4.5% |
| Applies to | Conversion during a lease and when exercising the renewal right |
| ⚠️ Does not apply | Brand-new contracts — those follow the market |
| If exceeded | The excess is void and recoverable as unjust enrichment |
This trips people up constantly. Renewing your current lease with a conversion is capped; signing for a new place is not. That's why market conversion rates often exceed the legal cap. Note too that a landlord cannot impose conversion unilaterally — the tenant must agree.
The real test — conversion rate vs your loan rate
- Conversion rate above your loan rate → borrow and keep jeonse
- Conversion rate below your loan rate → take the monthly rent
With the defaults, 4.5% (₩750,000) versus a 4% loan (about ₩667,000) favours borrowing. But at a market rate of 6%, rent becomes ₩1,000,000 and the gap widens sharply.
Numbers aren't everything. A loan means carrying deposit-recovery risk and facing borrowing limits, while renting ties up far less cash and less risk. See jeonse vs monthly rent.
Taxes can flip the answer
- Monthly rent — qualifying tenants can claim a rent tax credit, lowering the real cost.
- Jeonse loan — repayments may qualify for a deduction.
Compare after tax, not just interest. See the rent tax credit guide.
Limits of this tool
- The loan comparison counts interest only — no principal, fees or guarantee costs.
- The base rate changes; enter the rate current at your contract date.
- Maintenance and parking costs aren't included.
- Deposit-recovery risk can't be expressed as a number.
FAQ
How do I judge the landlord's offer?
Work backwards: find the rate that produces their figure. If it exceeds the legal cap and you're renewing, you can push back.
How do I choose a semi-jeonse split?
Vary the retained deposit and watch the rent move — it's about balancing available cash against monthly capacity. See choosing your split.
How should the contract record it?
Use an amendment stating the new deposit and rent, and obtain a fresh fixed date stamp (see tenant rights).
The conversion rate isn't the landlord's number to set — it's the basis for negotiation. Know the fair figure before the conversation starts.
This is a general-information estimate, not legal or tax advice. Caps and their scope can change and depend on your contract — seek professional advice if a dispute seems likely.
