Korean Job Discussion Forums

[Kenny Kimchee]

One of the (many) things that always baffled me about Korea was the key money system. I think I understand how it works, but I don��t understand why it works.

To my understanding, key money is a fully-refundable (?) deposit that you give to the landlord when you move in. The less key money you put down, the higher your rent; conversely, the more money you put down, the less your rent. Once you leave, you get (all of?) the money back.

OK, here come the questions:
-Is it possible to put enough key money down until your rent becomes zero? How much money are we talking about? I know that this figure would vary according the area and quality of the flat, so let��s look at three scenarios. What do you think the key money would be?

For this exercise, all apartments would be located within a five minute walk of Sadang station:

1) Scenario 1: A one-bedroom second floor apartment in an older villa.

2) Scenario 2: A studio on the second floor of a new-ish officetel.

3) Scenario 3: A one-bedroom apartment on the second floor of a new-ish high rise.

For those of you who have your own flats, could you describe your situation, in terms of location, quality of apartment and combination of key money/rent?

I have a lot more questions, but will hold off until some of you guys chime in. Your comments are appreciated.

[VanIslander]

There are other countries which also operate on the principle of key money.

Bolivia does as well. Put enough money down and you can rent a place for free, getting the entire principal amount back at the end of the term, and it's often done there and is enforceable in Bolivian courts, according to reports I encountered when researching South American travel opportunities.

In the Korean context, I'd check into the integrity of the particular owner you'd be dealing with, because there are too many bankruptcies and scamming going on to just trust anybody to give back the funds paid upfront.

[Zyzyfer]

I have some opinions about how it works, but nothing verifiable other than the rent at my current place. But this is an interesting topic that I haven't really seen discussed yet, so I hope someone chimes in with legit info. I'm planning to either move on after this contract to greener pastures or to buckle down and get my own place, so I have become a bit curious about the issue.

As for my experiences, my current dinky officetel is 5,000,000 won key money and about 450,000 a month for rent (all paid by the school) here in Bundang, and seem to be typical for a place with a parking space (swallows pyong, but I need it). My girlfriend paid like 30,000,000 won for key money and has about 200,000 rent each month for an old two-bedroom apartment, but that's way out in Suwon and it's pretty creaky by today's standards.

[komtengi]

if your key money is less than 10 million you get it back when you move out. but anything above that you usually wont get it back till the owner finds someone else to move in.

[schwa]

I think "key money" is a misnomer, a Japanese concept that involves a sizable moving-in fee that you never get back. What youre referring to is cheonsae, a deposit from which the landlord draws the interest as "rent" & then returns in full at the end of the lease, typically a 2-year agreement.

Up until recently, cheonsae alone was a common arrangement, but interest rates have been at historic lows, so cheonsae has risen accordingly or landlords require weolsae (monthly rent) as well. So yeh, the bigger the cheonsae, the lower the weolsae. This type of deal is usually for one year, then its the tenant's prerogative to renew for a 2nd year on the same terms.

If you fulfill your lease agreement (& give considerate notice -- a couple months is usual) then youre entitled to your deposit back at the time you leave. If you leave early, youre on the hook for the remainder of your lease unless you or the landlord finds a new tenant.

Its common practice & an excellent idea to check out the status of the owner & property at city hall or your local gu office before dishing out millions of won. Liens or outstanding taxes are definite red flags. If the owner goes bankrupt while holding your money, theres some kind of govt insurance but you could bank on that being a major hassle.

Sorry, cant help with going rates in Seoul.

[SuperHero]

[weatherman]

[kangnamdragon]

I put 90,000,000 down and pay no rent.

[rapier]

MOD EDIT

These guys that hand over 50 million won for a slightly bigger shoebox are foolhardy.

[kangnamdragon]

I believe it is insured.

[SuperHero]

[Ya-ta Boy]

According to the rules, the landlord must deposit the money and have it available when you move out at the end of the lease. Everyone has heard of cases where that was not done. Courts favor the renter on this point.

There is a standard formula used in determining key money and rent. Ask an adult Korean for the formula.

[SuperHero]

[Kenny Kimchee]

[Kenny Kimchee]