Korean Rent Increase Cap Calculator

Two questions arrive together whenever a Korean residential lease is renewed, and this calculator answers both on one screen. First, how much can the landlord raise the deposit and the monthly rent? Second, if the landlord wants to convert part of the deposit into monthly rent, how high can that rent be? Enter the current deposit and rent, the increase you have been asked for, any local ordinance cap, the Bank of Korea base rate and the amount of deposit to convert, and you see the figures at the legal maximum beside the figures you were asked for, with a verdict on whether the request exceeds the cap.

The two calculations rest on different provisions and set their ceilings differently. The increase cap is a fixed percentage written into the law; the conversion cap moves with the base rate. That is why the base rate is an input. When it changes, the conversion ceiling changes, and the calculator shows which of the two tests is the binding one.

Tenants who have been asked for an increase ahead of renewal. When the landlord says the market has moved and wants the deposit up by ₩50 million, you can check in numbers whether that is within what the law allows. The cap applies in full to a renewal made under the tenant's statutory renewal right, so a request above the cap can be refused.

Landlords use it too. Anything collected above the cap may have to be handed back later, so it is safer to know the limit before asking. A landlord who wants to lower the deposit and take rent instead, or a tenant short of lump-sum cash who wants to shift to monthly payments, uses the conversion side. The ceiling on the converted rent depends on the base rate, so enter the rate in force when the contract is signed.

The increase cap comes from 주택임대차보호법 제7조. A demand for an increase may not exceed one twentieth of the agreed deposit or rent, that is 5%, and a province or metropolitan city may set a lower figure by ordinance. An ordinance can only lower the statutory cap, so the calculator takes the smaller of 5% and the ordinance value. Once an increase has been made, no further increase is allowed within 12 months. The arithmetic is just the deposit and the rent each multiplied by the cap, and the same multiplication at the requested rate for comparison.

The conversion rate comes from 제7조의2 of the same Act and 시행령 제9조. When a deposit is converted into monthly rent, the rate may not exceed the lower of two tests: a flat 10% a year, or the Bank of Korea base rate plus 2% a year. With base rates low, the second test binds; only at very high base rates does the flat figure take over. The maximum monthly rent is the converted deposit times the conversion rate, divided by twelve.

Take a semi-jeonse lease with a ₩300,000,000 deposit and ₩500,000 monthly rent coming up for renewal. Raised to the full 5% cap, the deposit becomes ₩315,000,000 and the rent ₩525,000, increases of ₩15,000,000 and ₩25,000 respectively. If the landlord asked for the deposit to go up by ₩35,000,000, that exceeds the ₩15,000,000 ceiling and the calculator flags it as over the cap.

Now suppose the landlord proposes converting ₩100,000,000 of the deposit into rent. With a base rate of 2.5%, the base-rate test gives 4.5%, which is below the flat 10%, so the conversion ceiling is 4.5%. ₩100,000,000 times 4.5% divided by twelve is ₩375,000 a month. A proposal of ₩500,000 a month for that amount would be above the ceiling.

The first is thinking the cap applies to every lease. The 5% ceiling governs increases demanded during a lease and renewals made under the tenant's statutory renewal right. A fresh lease with a new tenant has no cap and can be priced at market. The second is treating the deposit and the rent as one pool. The cap applies to each separately; leaving one untouched does not buy extra room on the other.

The third is applying the conversion cap in reverse. It exists only for turning deposit into rent; there is no statutory ceiling on turning rent back into deposit. The fourth is using an old base rate. When the base rate falls, so does the conversion ceiling, so check the rate for the month the contract is signed. The last is not knowing that an excess can be recovered. Any part of an increase above the cap is void, and an overpayment already made can be reclaimed.