Wolse requires renters to deposit an arranged amount of money with the landlord, with monthly rent paid on a specified date of each month. The minimum deposit amount is 5million won or approximately US$ 5,500 and the deposit sum can be increased in order to lower the monthly rent fee. For instance, an increase of 5 million won in deposit money will result in a deduction of 50,000 won from the monthly rental fee. In the case the renter fails to make a monthly payment, the landlord has the right to deduct the amount from the key money deposit. The total amount of deposit sum is negotiable with the landlord. When all the monthly payments are made and the contract is fulfilled without any problems, the entire deposited sum is returned to the tenant. Conversion from jeonse to wolse is possible by multiplying 1/100 to the original jeonse deposit sum. Next, the wolse deposit amount is adjusted for. For example, for a jeonse house listed at 50,000,000 won: 50,000,000 x 1/100 = 500,000 (monthly payment) or 10,000,000 won (deposit) + 400,000 won (monthly payment). After completing the necessary steps, it is important to take care of the details on moving day. It can get hectic and it’s important to remember the following list.
1) You will have paid 10% of the total deposit sum on the day of signing the lease contract. The rest of the money needs to be deposited into the landlord’s bank account on the move in day. 2) Check with your realtor for all transaction fees and prepare the necessary amount in cash. Some landlords will require you to pay the first and last month rent on the day of the move-in. Realtors will also ask for their commission rate on the move-in date. The commission rate for general residential and housing valued between 50,000,000 and 100,000,000 is 0.4% or maximum of 300,000won. To calculate the amount, multiply the monthly rent by 100 and add the deposit amount, then multiply the amount by 0.4%. 3) Remember to check the calendar and try to avoid holidays and weekends. If the bank is closed, you need to prepare the deposit sum in cash in advance. It’s recommended you do not carry large sums of cash.
Jeonse(Key money deposit)
Jeonse or key money deposit is a housing rental system specific to Korea. Instead of paying monthly rent to a landlord, a large lump sum payment is deposited into the landlord’s bank account for the duration of the contract. By law, Jeonse contracts are signed for two years. At the end of the contract, the deposited amount is returned to the renter. Some landlords prefer this method because they can collect interest from the amount deposited in the bank. However, this is not the case with all landlords as some prefer the Jeonse method simply because of the fact they purchased the property with Jeonse contracts and they lack the funds to return the large deposit amounts out of their own pockets. Some may not like the key money deposit method since depositing a large sum of money comes with risks and the difficulty of trying to come up with a large sum of money all at once. However, this method is the most advantageous for tenants since the deposited sum is wholly returned at the end of the contract.When looking to rent on a key money deposit method, the first step you must take is to check that there are no unpaid loans. It is imperative that you check the building’s register before you sign. Tenants need to fulfill their contracted period if possible. If the tenant wishes to break a contract during the contracted period, negotiation with the landlord is necessary. The landlord has the right to hold the tenant’s deposit until a new tenant is found. In this case, the tenant must discuss the realtor’s fee for finding a new tenant with the landlord.
* Signing the lease
● The following is a list of steps you should take before signing a lease agreement.
1) Check registry (Court of Justice Registry Office): Have the realtor print it on the spot.
2) Discuss all details before writing the contract and make sure all three copies of contract for tenant, landlord and realtor are identical. Be thorough with this step as you are responsible for the contents of the contract.
3) Once the contract is signed, deposit 10% of the key money deposit amount in the landlord’s bank account. Remit the rest of the deposit amount along with the commission fee paid on the day of the move. Once the entire procedure is completed with the necessary transfers and payments, you are set to move into your new place. Refer to Tip Box for more information.
4) Check registry again before making the payment on the move-in day.
5) Confirm fixed date. This is the date signed and stamped by an authorized organization as stated on the ’Jeonse/Wolse’ contract to prove that a lease contract exits. Foreigners are able to confirm the fixed date at the Ministry of Justice Registry Office.