Jeonse
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Jeonse (전세:傳貰) is a real estate term unique to South Korea that refers to the way apartments are leased. Instead of paying monthly rent, a renter will make a lump-sum deposit on a rental space, at anywhere from 50% to 100% of the market value.
At the end of the contract, usually two or three years, the landlord returns the amount in its entirety to the renter. This practice is especially used during times of high interest rates, where landlords can make alternative investments during lease periods to make their profits. The homeowner is free to invest the deposit wanted, as long as the same amount of money is returned to the tenant at the end of the contract.
During times of lower interest rates, the wolse (월세), or monthly rent, is more often used. With a wolse lease, a renter signs a lease for 1 or 2 years and makes a deposit on the apartment equal to perhaps 10% of the market value. The renter then pays monthly rent.
This system is popular for two main reasons. First, there are very few mortgages in South Korea, so it is difficult for consumers to own a home. Also, real estate prices continue to increase so fast that what some see the situation as a housing bubble.
