Is Your Deposit-to-Rent Conversion Rate Fair?
When a Korean landlord converts part of a jeonse (lump-sum) deposit into monthly rent, the rate applied is capped by law. Under the Housing Lease Protection Act, that cap is the lower of the Bank of Korea base rate plus 2 percentage points, or 10% annually. For example, if the base rate is 3.5%, the legal cap is 5.5% — any conversion rate above that lets the tenant demand the excess back.
Enter the base rate, your deposit increase, and your monthly rent decrease to see the legal cap, your actual conversion rate, and whether it's fair. If your rate exceeds the cap, you can renegotiate with your landlord using the calculated fair rent decrease as a reference. For real disputes, consult Korea's Housing Lease Dispute Mediation Committee for an official ruling.
Frequently Asked Questions
Under Korea's Housing Lease Protection Act, the cap is the lower of the Bank of Korea base rate plus 2 percentage points, or 10% per year.
Tenants can demand the excess portion of rent above the legal cap be returned, and can negotiate a contract adjustment.
Yes, conversion rates are often set too high, so it's worth calculating the fair rate before signing.