초록

Korea has developed a unique rental system, the so-called
chonsei. Under the chonsei contract, tenants deposit a lump-sum
of money equivalent to over half of the housing price to house
owners for the rental contract period. During that period, tenants
do not need to pay rent on a monthly basis. Once the contract
is over, the landlords are expected to return the same amount
of money back to the renters; however, the landlords are able to
use the deposit money during the contract period for their own
purposes.
During the time of escalating housing prices and high interest
rates, both the renters and landlords have favored the chonsei
contract rather than monthly rent with deposit (MRD).
The tenants prefer chonsei because they don’t need to pay rent
every month, and they tend to consider the chonsei deposit
money as a mandatory saving or the seed money to buy a house
in the near future. What\''s more, landlords also favor chonsei
because collecting rent every month rent is cumbersome and has
a default risk. In addition, they are able to leverage the chonsei
deposit to buy another house as an investment. This works well
under the conditions that house prices keep increasing with high
interest rates and a shortage of rental housing units. However,
those factors fueling the chonsei system have faded out with the
mass provision of housing units, pessimistic expectations over
housing prices and economic recovery, and low interest rates.