What Is Korea's Jeonse Conversion Rate? A ₩150 Million Deposit, ₩1.6 Million Rent Example

A rate that puts deposit and rent on the same scale

All monetary figures in this guide are Korean won (KRW) — this is a Korea-specific lease calculation with no real U.S. or Chinese equivalent. It's hard to compare a full-deposit jeonse listing with a semi-jeonse or wolse (monthly-rent) listing just by eyeballing the numbers. Korea's jeonse conversion rate answers a specific question: what annual rate does the monthly rent you're paying, instead of a larger deposit, actually represent? Once you know that rate, you can convert the rent back into an equivalent deposit and compare listings on the same footing.

The formula is: converted jeonse deposit = existing deposit + (monthly rent × 12) ÷ conversion rate. Multiply the monthly rent by 12 to get the annual rent, divide by the conversion rate to see what deposit that rent is equivalent to, then add the existing deposit.

Working through ₩150 million deposit, ₩1.6 million rent

Suppose a tenant is exercising their statutory renewal right and negotiating to convert part of a ₩1.6 million monthly rent back into deposit. Annual rent comes to ₩1.6 million × 12 = ₩19.2 million. Divided by the legal cap of 4.75%, that's about ₩404.2 million in rent-equivalent deposit. Add the existing ₩150 million deposit, and the converted jeonse-equivalent deposit is about ₩554.2 million.

Run the same numbers at a typical market rate of 6% instead, and ₩19.2 million ÷ 0.06 = ₩320 million, bringing the converted deposit down to ₩470 million. A higher conversion rate makes the same rent equivalent to a smaller deposit — which is exactly why the law caps the rate: to stop a landlord from applying an excessively high conversion rate that saddles a tenant with more rent than they should owe.

The 4.75% legal cap doesn't apply to every lease

South Korea's Housing Lease Protection Act Article 7-2 and its Enforcement Decree Article 9 cap the deposit-to-rent conversion rate at the lower of 10% a year or the Bank of Korea base rate plus 2 percentage points. After the Bank of Korea raised its base rate to 2.75% on July 16, 2026, the legal cap as of August 2026 is 4.75% (2.75% + 2 points). Because it moves with the base rate, confirm the current figure before relying on it in a real negotiation.

That cap has binding force in exactly two situations: when a tenant exercises their statutory renewal right, and when a deposit is converted to rent mid-lease. It does not apply to a brand-new lease with a new tenant — landlord and incoming tenant are free to negotiate any rate. Market conversion rates on new leases commonly run higher than the legal cap, and that isn't a violation of the law; those transactions simply fall outside its scope.

Why new-lease market rates run higher than the legal cap

The legal cap functions more as a floor of protection for a sitting tenant renewing on largely the same terms, keeping a landlord from imposing an excessive conversion rate. A brand-new lease, on the other hand, is a fresh negotiation between a landlord and a new tenant, so it reflects market factors like jeonse-loan interest rates, vacancy risk and local supply and demand.

Korea Real Estate Board (한국부동산원) data shows the national average conversion rate running in the low-to-mid 6% range recently — noticeably above the 4.75% legal cap. That's why comparing new-lease listings calls for a market-typical rate, like this calculator's 'Market typical' preset, rather than the legal cap, to get a realistic converted figure.

• Renewing or converting mid-lease: check whether the offered rate exceeds the legal cap (4.75% a year as of August 2026).
• Comparing brand-new leases: use a market-typical rate (commonly 5%–7%) instead of the legal cap.
• Because the legal cap moves with the Bank of Korea base rate, recheck the current figure just before signing.

Common questions