When a Korean tenant exercises the statutory renewal right, the landlord may raise the deposit or rent by no more than 5% of the amount at the time of the request. On a 300 million won jeonse (lump-sum deposit lease) that is 15 million won; on monthly rent of 800,000 won it is 40,000 won. Article 6-3 of the Housing Lease Protection Act treats the renewed lease as identical to the previous one, allowing only the deposit and rent to move within the limits of Article 7 — and that limit is one twentieth, or 5%.
The number that actually varies is whether that 5% is taken as deposit or as monthly rent, because the conversion rate is tied to the policy rate. After the Bank of Korea's Monetary Policy Board raised the base rate from 2.75% to 3.00% on August 27, the statutory conversion ceiling moved from 4.75% to 5.00%.
What the 5% cap is worth as monthly rent
The ceiling comes from Article 7-2, which caps deposit-to-rent conversion at the lower of two rates: the rate set by presidential decree (10% a year) or the Bank of Korea base rate plus the decreed margin (2 percentage points). With the base rate at 3.00%, that second figure is 5.00% — below 10%, so 5.00% applies.
Monthly rent equals the converted amount times the rate, divided by twelve. The table computes the 5% headroom by deposit size and what that headroom becomes if taken entirely as rent. The last column applies the 4.75% rate that held when the base rate was 2.75%.
| Current deposit (KRW) | 5% headroom (KRW) | If taken as deposit (KRW) | As rent at 5.00% (KRW/month) | At the former 4.75% (KRW/month) |
|---|---|---|---|---|
| 200M | 10M | 210M | 41,667 | 39,583 |
| 300M | 15M | 315M | 62,500 | 59,375 |
| 500M | 25M | 525M | 104,167 | 98,958 |
| 700M | 35M | 735M | 145,833 | 138,542 |
The 0.25 percentage point hike adds 3,125 won a month on a 300 million won deposit and 7,291 won on a 700 million won one. The amounts are small; the direction is not. A higher conversion rate means the same 5% headroom buys the landlord more monthly income.
The reverse calculation matters too. If a 300 million won jeonse is restructured to a 200 million won deposit plus rent, the 100 million won being converted yields a legal ceiling of 416,667 won a month at 5.00%. Anything above that breaches the conversion cap independently of the 5% rule.
Article 7 also limits frequency: no further increase may be demanded within one year of the contract or of a previous increase.
The window for making the request
Article 6-3 allows the tenant to request renewal between six months and two months before the lease ends; the two-month boundary applies to contracts first signed or renewed on or after December 10, 2020. Missing the window does not destroy the right in general — it forfeits the chance to use it against that particular expiry.
Once per contract, two years, five percent. Anything outside those three numbers is negotiation, not the renewal right.
The right may be exercised once per contract, and the renewed lease is deemed to run for two years. In practice the request should go by a method that leaves proof of delivery, such as text message or content-certified mail, since disputes usually start with whether notice arrived before the two-month line.
When a landlord may refuse
Article 6-3(1) lists the grounds exhaustively. Wanting a higher rent, or having found another tenant, is not among them.
- Rent arrears reaching the equivalent of two months' rent
- Leasing obtained by fraud or other improper means
- Mutual agreement in which the landlord provides substantial compensation
- Subletting all or part of the property without the landlord's consent
- Damage to the property through the tenant's intent or gross negligence
- Total or partial destruction making the lease impossible to fulfil
- Demolition or reconstruction, where the statutory notice conditions are met
- Actual occupancy by the landlord or their direct ascendants or descendants
- Other serious grounds, such as a significant breach of the tenant's obligations
The occupancy ground draws the most disputes. Because it rests on the landlord's stated intention, proof cannot realistically be demanded at the moment of refusal — the law handles it afterwards, through damages.
Damages when the landlord re-lets instead
If a landlord refuses renewal on occupancy grounds and then, without justification, leases to a third party before the renewed term would have expired, damages are owed. Absent an agreed sum, the award is the largest of three figures. For a deposit-only jeonse, the deposit is converted to a monthly equivalent at the lower Article 7-2 rate.
Applying this to a 300 million won jeonse refused on occupancy grounds and then re-let at 360 million won, using the current 5.00% conversion rate:
| Basis | Calculation | Amount (KRW) |
|---|---|---|
| Three months of the former converted rent | 300M×5.00%÷12=1.25M, ×3 | 3.75M |
| Two years of the difference in converted rent | (1.5M−1.25M)×24 | 6M |
| Actual proven loss | Moving costs, brokerage fees, etc. | As proven |
Because the largest figure governs, this case leaves 6 million won even without proving specific losses. Had the new lease matched the old terms, the second line would be zero and the three-month figure of 3.75 million won would set the floor.
How this differs from tacit and negotiated renewal
A lease can continue by three routes, and only one of them carries the 5% cap. As KB's guide sets out, tacit renewal carries the previous terms unchanged with no increase at all, while a negotiated renewal is not bound by the increase ceiling.
| Route | Rent increase | Uses up the renewal right | Tenant's early termination |
|---|---|---|---|
| Statutory renewal right | Up to 5% | Yes (once per contract) | Effective 3 months after notice |
| Tacit renewal | None; terms carry over | No | Effective 3 months after notice |
| Negotiated renewal | No ceiling | Per the agreement | Not available in principle |
The costliest combination is signing a fresh contract — a negotiated renewal — in a situation where the statutory right was available. The 5% ceiling disappears, and so does the three-month termination clause. That is why the document should record that the renewal right is being exercised.
If a new contract is signed with a higher deposit, the increased portion needs a fresh confirmed date (hwakjeongilja) to secure priority.
What to check
- Time to expiry — the request must land between six and two months before the end date
- Method of notice — something that records the moment of delivery
- The base figure for the 5% — the previous contract's deposit or rent, with no further increase within one year
- Any rent-conversion offer — it cannot exceed the converted amount × 5.00% ÷ 12
- The wording of the document — whether it records the renewal right or a new contract changes both the cap and the termination terms
- If refused on occupancy grounds, whether the property is leased out during the two years that would have been renewed
- The Bank of Korea rate calendar — the conversion ceiling tracks the base rate plus two points
