Seoul, Housing (Rentals)

I'm also curious about housing options in the city. So I tagged along with the friends who're apartment-shopping. A good half, say 56% of Seoul's population are house-owners. The rest rent. As we went along, the friends took time to explain to me about the purchase and rental system in Seoul, and I did some googling. Nothing complicated about purchasing a property. However, the systems of rental are mind-boggling.

There're three rental systems in Seoul, the 'jeongsei' (or 'chonsei') and two variations of 'wolse' (or 'sageulse'). From my basic understanding of these systems, the paperwork and legal consequences are ridiculously painful. The city provides a 'House Lease Protection Act' for the tenants, but there're loopholes that give houseowners a lot of control and space to maneuver around investment planning. It's like another available source of loan (without interest) for the middle-income group who can afford more than one residential or commercial property. However, it doesn't particularly make sense (for the houseowner) unless bank interest rates are so low that it wouldn't matter either way, or one has a guaranteed return on a certain investment.

For jeongsei, the tenants literally don't pay monthly rent, and simply give the houseowners a sort of fixed sum between 30% - 70% of the price of the property and stay for a year or even two. At the end of this agreement, the owners return the fixed sum with interest and the tenants must move out. Deductions for property damage, etc may be deducted from this original amount. If the owners are unable to return this fixed sum at the agreed-upon date, then the tenants can stay until the full original sum is returned.

The wolse system is cheem-o-logy. The usual monthly rental applies. However, in addition, there's a refundable deposit required, not unusual. However, this deposit may be levied at a staggering amount that's ten to twenty times the monthly rental. And get this, the larger the deposit you put down, proportionately, your monthly rental decreases. Again, tenants stay for about two years, or until the refundable deposit is returned.

Of course putting your money in a bank account will yield greater interest, in the light of a non-specific cost-benefit analysis. But these systems ain't shabby. Fairly interesting. I think renting is such a great option here (obviously looking at it from a Singaporean's perspective). If I don't have enough cash to split it into rent and a fixed deposit-something-investment account, then a jeongsei agreement works great. Cough up SGD15,000 upfront in cash, a 1-bedroom, approximately 1000sqf half-furnished flat can be yours for the year and a little more, and you'll still get money back at the end of the tenancy period. Much better than not getting anything back at all. However, there's another trend that seems to see jeongsei not being very popular nowadays, and the trend's shifting to favor a wolse system.