Jeonse-occupied home sales rise under loan curbs

At a realtor’s office in Daeheung-dong, Mapo-gu, a man in his 40s recently found an apartment priced between 900 million and 1 billion won—about half the cost of similar units in the area. The key? The property came with an existing lump-sum deposit lease, allowing the buyer to secure a home within budget. According to the realtor, two prospective buyers visited in the first week of July alone, specifically seeking homes with this type of lease structure—known as jeonse, or lump-sum deposit contracts.

The uptick follows the enactment of new mortgage regulations on June 27, which banned lump-sum deposit loans used under ownership transfer conditions in the Seoul metropolitan areas and regulated areas. Previously, property buyers could take over a property by using the tenant’s deposit to cover part of the sale price. However, this practice is now strictly prohibited under the updated loan rules.

Under a jeonse succession sale, a buyer acquires a home that already has a tenant under a lump-sum lease and assumes the existing contract. The buyer pays only the portion of the home’s price not covered by the tenant’s deposit. It effectively allows a purchaser to finance part of the property through the tenant’s deposit, though the previous owner originally signed the lease.

“Homes with jeonse tenants are typically 20 to 30 million won cheaper than vacant homes, because buyers can't move in immediately,” said a realtor based in Haengdang-dong, Seongdong-gu. “But with the new loan restrictions, that price gap is closing.”

As the housing market slows, homeowners are increasingly using jeonse-occupied homes as a strategy to attract buyers. In many cases, property owners enter into new jeonse leases before listing their homes for sale.

However, this workaround comes with risks. Transactions can fall through if tenants refuse to cooperate, and new restrictions limit mortgage loans to return jeonse deposits to just 100 million won. This could leave new homeowners scrambling to raise the remaining funds to repay tenants. “Stricter regulations will inevitably lead to creative ways to get around them,” said Kim In-man, director of the Kim In-man Economy and Real Estate Research Institute. “To truly stabilize the market, the government needs to focus on increasing housing supply, not just imposing limits.”


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