Landlords sell homes, stay as tenants

An 84-square-meter apartment in a large complex of about 1,700 units in Seoul’s Mapo District was recently sold for 2.5 billion won. Unusually, the transaction was completed on the condition that the original homeowner would remain in the property as a tenant. The real estate agent who brokered the deal explained, “The seller, who had lived in the unit since it was built, wanted to realize gains from the recent price surge while continuing to live there for reasons such as their child’s education.”

● 'Owner leasebacks' reemerge amid home price rally

A growing number of so-called “owner leaseback” transactions are appearing in Seoul, particularly around neighborhoods near the Han River. In such deals, homeowners sell their properties and immediately lease them back. The trend, which was first seen during the sharp price run-up under the Moon Jae-in administration, has resurfaced this month as home prices in key areas of Seoul have jumped, despite ongoing restrictions on loans, taxes, and land use.

This type of deal can benefit both parties under current market conditions. Sellers can secure capital gains without relocating, while buyers only need to pay the difference between the sale price and the lease deposit, thereby reducing their cash burden. These deals often involve relatively high lease deposits, allowing buyers to acquire the property with less cash compared to typical gap investments. Buyers can also avoid the hassle of finding new tenants.

For example, a unit of the same size at E-Pyunhansesang Kumho Park Hills in Seoul’s Seongdong District is being marketed under this arrangement. The seller initially planned to upgrade to a property in the Gangnam area, but as prices there continued to soar, they opted to sell now and wait for the market to stabilize.

Another 84-square-meter unit at Oksu Samsung Apartments in Oksu-dong is listed for 2 billion won. A local agent said the owner plans to move in as a tenant, paying a lease deposit of 750 to 800 million won. When the reporter showed interest, the agent proposed raising the deposit to 850 million won.

● Concerns rise over impact on home and lease prices

This relatively uncommon transaction type is mainly observed in areas such as Mapo and Seongdong Districts along the Han River, a result of spillover demand following the designation of Seoul’s three Gangnam districts and Yongsan as land transaction permit zones in March. In these regulated zones, gap investment is banned, causing investor demand to shift to nearby areas.

During the Moon administration, owner leasebacks were common in high-priced areas, such as Gangnam and parts of Seongnam, including Bundang and Pangyo, where strict lending rules were in place. Today, similar deals are concentrated in Mapo and Seongdong, where high-end properties are located, but the permit restrictions do not apply.

Experts warn that such deals could further fuel price increases. Since buyers in leaseback arrangements face lower upfront costs, they may be willing to pay higher prices. Nam Hyuk-woo, a real estate researcher at Woori Bank, said, “The increase in sales prices tends to outpace the rise in lease deposits, effectively lowering the buyer’s investment burden. However, such transactions during a rising market can push actual transaction prices even higher.”

Concerns are also growing over rising lease prices. Park Won-gap, chief real estate strategist at KB Kookmin Bank, said, “As leaseback deals increase, the supply of available rental units shrinks, which could drive up lease prices.”


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