Instead of paying monthly rent, a renter will make a lump-sum deposit on a rental space, at anywhere from 50% to 80% of the market value, which is then returned at the end of the lease term.
It is also possible to combine a lower jeonse deposit with a small monthly rent; this is known as banjeonse (반전세; 半傳貰; lit.
half-jeonse) Jeonse involves the tenant giving the landlord a large sum of "key money" when a lease is signed.
[2] The tenant is then allowed to stay in the property "rent-free", not requiring any additional monthly payments, until the end of the lease, which is usually 2 years.
[3] Utilities and other costs (water, gas, electricity, cable, phone, internet, security) are applied for and paid by the tenant.
[6] This has made the system less integral and beneficial to property developers than it once was, and has encouraged the increase in popularity of renting via wolse, rather than deposits.
Recent decreases in jeonse market share are due to increasing interest rates during COVID-19 recovery, and government policy.
However, if their landlords fail to provide the difference either with their own money or by taking a loan, the tenants are left with a few difficult options such as a lawsuit.
During times of expansion in the housing market, or in cases of excess demand, there can be large hikes in the percentage of the property's value that the tenant must pay.
This has been characterized as a crisis in the past, namely in the 1990s, where over a dozen people were driven to suicide in the face of these increases in deposit prices.