Jeonse-to-Monthly-Rent Conversion Rate
전월세전환율
The rate applied when converting a jeonse deposit into monthly rent. Under Article 7-2 of the Housing Lease Protection Act, the statutory ceiling is the Bank of Korea base rate plus 2 percentage points (5.5% as of 2026). The market conversion rate published monthly by KB Kookmin Bank reflects actual transactions, and during periods of shrinking jeonse supply it functions as a de facto compulsory housing-cost formula for tenants. Seoul's apartment market rate of 4.26% in late 2025 turned the median 600-million-won jeonse into 2.13 million won in monthly rent.
In depth
Legal Basis
The Jeonse-to-Monthly-Rent Conversion Rate is governed by Article 7-2 of the Housing Lease Protection Act, which caps the monthly rent that can be charged when converting deposit into rent. The statutory rate is the lower of: (1) a rate set by presidential decree reflecting bank lending rates (10%), or (2) the Bank of Korea base rate plus a presidential decree mark-up of 2 percentage points, yielding 5.5% as of 2026.
Statutory vs Market Conversion Rate
Two types exist. The statutory rate is the legal ceiling under the Housing Lease Protection Act and applies only to jeonse-to-monthly-rent conversions in renewal contracts, not new ones. The market conversion rate (published monthly by KB Kookmin Bank based on actual jeonse and monthly-rent transactions, broken down by region, housing type, and floor area) carries no legal force but functions as the de facto benchmark for rent-setting.
The Shift to Monthly Rent and Forced Housing Costs
Since the 2020 "Lease 2 Acts" (Contract Renewal Claim Right and Jeonse-Monthly-Rent Cap), shrinking jeonse supply and accelerating conversion to monthly rent have turned the market conversion rate from a reference index into a mechanism that dictates tenants' effective housing-cost burden. That the conversion rate exceeds the base rate reveals a structure in which landlords capture tenants' labor income at a margin higher than financial intermediaries. Seoul's apartment market rate of 4.26% in December 2025, a seven-year high, combined with a severe supply cliff to drive monthly rent burdens sharply upward.
Sources
- donga.com (동아일보 '부동산 빨간펜': 법정 전환율과 시장 전환율의 구분, 계산 공식, 법적 근거, 적용 범위)
- Wikipedia (KO) (Wikipedia 반전세: 전월세 전환율의 정의, 상한선 공식, 주택임대차보호법 근거)
- xn--989a00af8jnslv3dba.com (부동산위키: 주택·상가·민특법 산정률 비교, 법조문 원문)
- casenote.kr (CaseNote 주택임대차보호법 제7조의2: 법조문 원문 및 시행령)
- data.kbland.kr (KB부동산 데이터허브: 시장 전환율 공식 및 데이터 발표 체계)