Seoul tenants dig in: Lease renewal rights surge across villas, officetels

As Seoul's jeonse shortage deepens, more tenants are choosing to stay put by invoking their lease renewal request right — and the trend is now spreading beyond apartments to villas and officetels alike.

Real estate information app Jipoom analyzed Ministry of Land, Infrastructure and Transport actual transaction price data and found that Seoul officetel jeonse and wolse renewal contracts totaled 8,650 in the January–April period this year, up 14.8% from 7,536 in the same period last year.

Of those, contracts in which tenants exercised the lease renewal request right rose 28.8% year on year — from 2,014 to 2,595 — nearly double the rate of increase for overall renewal contracts. The share of renewal contracts invoking the right also climbed 3.3 percentage points, from 26.7% last year to 30% this year.

The lease renewal request right allows a tenant to demand one additional two-year term. The renewal rate refers to the share of all jeonse and wolse contracts that are renewals, while the renewal-right usage rate measures how many of those renewals were secured by formally invoking the right.

Analysts say the data points to more than a simple uptick in contract extensions — tenants are showing a growing determination to hold on to their current homes. The overall renewal rate for Seoul officetels edged up just 1.2 percentage points, from 24% to 25.2%, while the renewal-right usage rate rose by a considerably wider margin.

"While renewal contracts grew 14.8%, those invoking the renewal right surged 28.8%, pushing the usage rate past 30%," a Jipoom official said. "It is a clear sign that tenants are actively exercising their rights to secure housing stability."

The "stay put" trend is not confined to officetels. Use of the lease renewal request right is also rising rapidly in the row-house and multi-family housing market.

Ministry of Land, Infrastructure and Transport actual transaction price data show that Seoul row-house and multi-family jeonse and wolse transactions totaled 49,679 in the January–April period this year, up 7.4% from 46,244 in the same period last year.

The share of existing tenants extending their contracts is also growing. Renewal contracts accounted for 27.25% of Seoul row-house and multi-family transactions in the first four months of this year, slightly above the 26.73% recorded in the same period last year. The share of renewals invoking the lease renewal request right reached 32% this year, up 7.2 percentage points from 24.8% a year earlier.

Analysts attribute the shift to a combination of factors: scarce and expensive apartment jeonse listings in Seoul have pushed demand toward villas and officetels as alternative housing, and rising housing costs are making tenants more inclined to lock in their current terms through renewal contracts.

Experts said the use of the lease renewal request right is likely to keep rising for now, given Seoul's persistent housing supply shortage and shrinking jeonse and wolse inventory. They added that if the government moves to tighten jeonse loan regulations, tenants' preference for renewing in place could grow even stronger.

Ham Young-jin, head of Woori Bank's Real Estate Research Lab, said there is a lag before the government's pledged increase in non-apartment supply takes effect, and jeonse loan regulations could tighten further. "Since tenants cannot count on jeonse support, use of the lease renewal request right will increase across both apartments and non-apartment housing," he said.

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