Bottom line. When a landlord asks to raise your jeonse (lump-sum deposit lease) or monthly rent by more than 5%, a tenant in Korea has three paths. Exercising the right to request contract renewal caps the increase at 5% and guarantees two more years. But this 5% cap works only when an existing tenant renews — it does not apply to a brand-new contract the landlord signs with a new tenant. The key point (as of 2026-07-22) is that even if you agreed to an 8% increase, your renewal-request right itself remains alive.
The 5% cap works ‘only at renewal’
People often understand the rent-cap system as “rent can only rise up to 5% every two years,” but that is not quite accurate. According to the Q&A on the revised Housing Lease Protection Act compiled by the Ministry of Land, Infrastructure and Transport (MOLIT), the 5% rent limit applies “only when raising rent within an ongoing contract, or when exercising the right to request contract renewal.”
In other words, when an existing tenant leaves and the landlord signs a new contract with a third party, the 5% rule does not apply. If the market rate has risen 20%, the landlord can charge 20% more. So the “5% cap” is a card the tenant only holds when actively exercising the renewal right — not a shield that rolls in on its own. Miss this distinction and you get pushed aside the moment the landlord says “then move out.”
One more thing. Local governments can set this cap lower than 5% by ordinance. What the law fixes is only the ceiling; depending on the region, it can be tightened to 3% or 4%. You need to check whether your local government has a separate ordinance. Also, if you write a new contract or change the deposit or monthly rent, a lease-reporting obligation follows. You must report within 30 days of signing, and this report automatically carries the effect of a fixed date (confirmed date of priority).
In practice, the first thing a tenant should confirm is: “Is what the landlord is now demanding of me a renewal, or a new contract with a new person after pushing me out?” If the same tenant continues living in the same home, it is a renewal, and the 5% cap applies. Conversely, if the landlord has legitimate grounds to refuse renewal, the tenant is pushed outside the cap’s protection. So negotiation should always start by first clearly establishing the position: “I am requesting a renewal.”
The renewal-request right: rules for exercising and refusing
The renewal-request right is not something that attaches automatically just because you live there quietly. Based on the MOLIT Q&A, the requirements for exercising it are as follows.
- Exercise window — from 6 months to 2 months before contract expiry. If the term ends August 31, you must convey your intent before midnight on June 30. Miss this window and the renewal right for that year becomes hard to use, so marking six months before expiry on your calendar is the single most important thing in practice.
- How to exercise — text or a phone call works, but to prevent disputes, a clear expression of intent such as certified content mail (naeyongjeungmyeong) is safest. Implied renewal (continuing to live without saying anything) is not treated as exercising the renewal right. Put the other way: if you have been living under implied renewal, your renewal right is still fully intact.
- Count and term — once only, two years guaranteed. No matter how many years the contract has run, you may use it once.
- Early move-out — even after securing a fresh two years by exercising the renewal right, the tenant may give notice of termination at any time. It takes effect three months after notice, and you must pay rent for those three months.
Conversely, the leading ground on which a landlord can refuse renewal is actual residence. If the landlord or a direct-line relative says they will move in and live there, they can refuse by notifying that intent during the 6-months-to-2-months-before-expiry window. The problem is when this ground is false. If the landlord pushes the tenant out claiming they will live there, then immediately rents to someone else, the tenant can claim damages. The compensation is the amount agreed in the contract if there is one; if not, the largest of the amounts under the statutory calculation standard applies. That means there is real value in checking who moves into that home even after you leave.
When the landlord asks for more than 5% — three paths
When you receive a demand to “raise it by more than 5%,” a tenant broadly has three options. Each gives and takes something different.
| Choice | Increase cap | Residence guaranteed | Watch out |
|---|---|---|---|
| ① Exercise renewal right | Within 5% | 2 years | Can be blocked if there is a legitimate refusal ground such as landlord’s actual residence |
| ② Negotiated increase | No limit | Agreed term | Even after agreeing to an 8% raise, the renewal right remains separately alive |
| ③ Move out (new contract) | At market rate | New 2-year contract | Incurs moving costs, brokerage fees, loan re-execution costs |
Taking a jeonse home worth 500 million won as a benchmark, the weight of each choice becomes clear when you look at how much the deposit jumps on each path. It is plain at a glance that using the renewal right ties the increase to about one-third of a new market-rate contract.
+25 million won
+40 million won
+75 million won
※ Assumes a 500 million won jeonse. Market increase rates are illustrative and vary by region and timing.
By the numbers alone, exercising the renewal right always looks like the answer, but reality is a bit more complex. The relationship with the landlord can sour, making the remaining two years uncomfortable; conversely, if the market rate looks set to rise further, locking it at 5% now is advantageous for two years down the road. On the other hand, in a phase where market rates are falling, sometimes moving to a cheaper home without using the renewal right wins on total cost. The point is: don’t just look at the cap in the table — put moving costs, the direction of market rates, and residential stability on the scale together.
Even if you agreed to an 8% raise, the renewal right survives
This is where many tenants get confused. Suppose that before expiry, you agreed with the landlord to “just raise it 8% and stay two more years” and wrote a new contract. It feels like a loss since you went past 5%, but the MOLIT Q&A explicitly states that even in this case you can separately exercise the right to request contract renewal.
The example MOLIT gives is clear. A tenant who signed a first jeonse contract from September 2019 to September 2021, then by mutual agreement renewed from September 2021 to September 2023 with the rent raised 8% —
- can, in July 2021 (2 months before the end), exercise the renewal right to roll the increase back to under 5%,
- or keep the contract raised 8% as is, and then, when that contract ends in July 2023, exercise the renewal right.
That is, agreeing to a negotiated increase does not mean you have already used up the renewal-right card. The card is still in your hand; you only decide when to play it. The landlord’s line, “you already agreed, so nothing can be done,” is contrary to fact. That said, in practice, when exercising the renewal right, it is safer to clearly note in writing that “this renewal is an exercise of the renewal-request right under the revised statute.” If a simple re-contract and an exercise of the right get mixed up, a dispute can arise later.
When they ask to switch jeonse to monthly rent — the current conversion rate is 6.25%
Cases where the landlord proposes “let’s convert part of it to monthly rent” instead of a raise are also increasing. Since a renewed contract is in principle treated as re-signed under the same conditions as before, the landlord cannot forcibly convert jeonse to monthly rent without the tenant’s consent. It is possible if the tenant accepts, and in that case the statutory conversion rate applies.
The statutory conversion rate is the lower of ‘10%’ and ‘base rate + 3.5%’. Since the Bank of Korea base rate is 2.75% (raised 2026-07-16), the conversion rate right now is 2.75% + 3.5% = 6.25%. Keep in mind this is much higher than in 2020 (conversion rate 4%), when the MOLIT example was published.
If you convert 200 million won of a 500 million won jeonse to monthly rent, then 200 million × 6.25% ÷ 12 = about 1.04 million won per month. Under the same conditions at 4% in 2020, it was about 670,000 won per month. This means in a rising-rate phase, converting jeonse to monthly rent becomes more unfavorable for the tenant. If you receive a monthly-rent proposal, it is safer to run this calculation first before agreeing. Conversely, if tying up a lump sum in jeonse is burdensome and you have cash-flow room, conversion can sometimes be the better choice, so it is right to calculate both directions.
Getting a feel for the math is simple. Multiply the deposit difference you want to shift to monthly rent by the conversion rate (currently 6.25%) and divide by 12 to get the monthly burden. For example, if you reduce the deposit by 100 million won and shift it to monthly rent, 100 million × 6.25% ÷ 12 = about 520,000 won per month. If the landlord proposes “just add 500,000 won of monthly rent,” you can work backwards to see how much deposit that 500,000 won replaces and weigh the gain or loss. The moment you answer a proposal with numbers rather than gut feeling, the balance of the negotiation shifts.
Frequently asked questions
Q. If the contract has a special clause saying “rent rises at market rate on renewal,” is the 5% cap nullified?
Because the renewal-request right is a legally guaranteed right, special clauses unfavorable to the tenant are in principle limited in effect. Still, since there is room for dispute, if such a clause exists it is safer to address it before signing.
Q. Can I still use the renewal-request right even if the landlord has changed?
Yes. Even if the leased home is sold, the tenant’s renewal-request right remains intact. However, if the new landlord wants to live there themselves, that can be a ground for refusal.
Q. If I agree to a 5% increase, do I have to redo the fixed date and resident registration?
If the deposit has increased, it is safer to obtain a new fixed date for the increased portion. The priority of the existing deposit is maintained, but the added amount is protected only from the new fixed-date point.
Q. What if I don’t have the cash to pay the 5% jeonse increase?
If you have remaining jeonse-loan capacity for the increased portion, additional execution may be possible in some cases. But conditions differ by bank and product, so it is better to check your loan capacity first before expressing intent to renew.
Q. If I exercise the renewal-request right, must I serve the full two years?
No. Two years is merely guaranteed; the tenant can give notice of termination midway. It takes effect three months after notice, and you must bear rent for those three months.
In closing — the tenant’s practical checklist
To sum up: First, the 5% cap works only at renewal, so when you get an increase demand, before the emotional battle, recall the fact that “I hold the renewal-request-right card.” Second, mark the expiry date on your calendar in advance so you don’t miss the exercise window (6 to 2 months before expiry), and leave your expression of intent by certified content mail. Third, even if you agreed to a raise beyond 5%, the renewal right is alive, so don’t give it up in haste.
Fourth, if you get a monthly-rent-conversion proposal, calculate the gain or loss yourself at the current 6.25% conversion rate. Fifth, if you were refused on the ground of actual residence, verify the home’s real use even after you leave. A right is a shield only for those who know it. If you have a renewal coming up, following this order step by step is recommended.
Primary sources · Ministry of Land, Infrastructure and Transport, “Q&A on the Revised Housing Lease Protection Act” (Korea Policy Briefing, korea.kr) · MOLIT Housing Lease Protection Act FAQ (molit.go.kr) · Housing Lease Protection Act Articles 6-3, 7, 7-2 (law.go.kr) · Bank of Korea base rate (bok.or.kr, raised to 2.75% on 2026-07-16)
Reference media · Hankyung Real Estate Value-up Center · Budongsan114
This article is general information; individual matters may vary by circumstance, and in a dispute we recommend consulting the Korea Legal Aid Corporation (132) or the Housing Lease Dispute Mediation Committee. (As of 2026-07-22)
This article was automatically translated from Korean by AI. Please refer to the Korean original for the most accurate content.