Monthly rents above W10m surge 36% in a year

With a tax overhaul targeting ultra-high-end properties on the horizon, the number of lease contracts with monthly rents exceeding 10 million won ($7,470) has risen 36% in a single year. Experts say more landlords are likely to pass their increased property tax burden on to tenants.

According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system, 344 lease contracts with monthly rents above 10 million won were recorded in the year through Oct. 8 — a 36% increase from the 253 contracts signed in the preceding 12-month period.

Also notable is the rising use of contract renewal rights in the ultra-high-end rental market. About 28 such rights were exercised in leases with monthly rents of 10 million won or more over the past year, double the 14 cases recorded in the prior year. The contract renewal right is a one-time legal guarantee that allows tenants to extend their lease for greater residential stability.

The surge in high-end monthly rents is widely attributed to anticipated property tax increases on ultra-expensive homes. The government earlier announced a 2026 tax reform package that would significantly raise property holding taxes on such properties. Under the plan, the fair market value ratio applied to single-home owners will rise from 60% to 70% starting next year.

Tax rates will also increase across all brackets: properties valued between 600 million won and 1.2 billion won will face a rate of 1.3%, up 0.3 percentage points; those between 1.2 billion won and 2.5 billion won will be taxed at 1.5%, up 0.2 percentage points; and properties between 2.5 billion won and 5 billion won will be subject to a 2.0% rate, up 0.5 percentage points. These rates apply to one- and two-home owners starting next year, with further increases for properties valued above 1.2 billion won set to take effect in 2028.

Because both the fair market value ratio and the tax rate are applied to the amount remaining after the basic deduction, high-value properties are structurally more exposed to the changes. Tax experts estimate that property holding taxes on ultra-high-end homes could rise by anywhere from 50% to more than 100% under the new framework.

A 244-square-meter apartment at Banpo Xi in Banpo-dong, Seocho-gu — situated along the Han River — was originally leased with a deposit of 300 million won ($224,000) and a monthly rent of 10.56 million won. In September, the landlord raised the monthly rent to 13 million won upon renewing the contract.

A wealth management expert said owners of ultra-high-end properties tend to have relatively comfortable cash flows and often do not react sharply to increases in the comprehensive real estate tax. "But as the tax burden grows, there is a clear movement to offset it through rent adjustments — either converting jeonse arrangements to monthly rent or raising existing monthly rents," the expert said.

Some landlords are also moving to sign leases with corporate tenants rather than individuals. The thinking is that deposit and rent terms can be negotiated more flexibly with corporate lessees.

"Landlords tend to prefer corporate tenants — particularly companies leasing units for senior executives — because rent increase negotiations go more smoothly," the expert said.