![[HOAM Foreign Law Column] Rent Increase Cap: Can the Landlord Raise it by 20%?](/_next/image?url=https%3A%2F%2Fagqdgbuateknhwpocrgu.supabase.co%2Fstorage%2Fv1%2Fobject%2Fpublic%2Fasset-generation%2Fd5640e14-e5b7-41b3-800e-609cb8329013%2Fagent-generated%2F1784522127815_0.jpg&w=3840&q=75)
In Korea, the Housing Lease Protection Act sets a strict limit on how much a landlord can increase the rent. This is commonly known as the '5% Rent Increase Cap.' Understanding this rule is vital to ensuring your housing costs remain stable and that you are not being taken advantage of.
1. When Does the 5% Cap Apply?
The 5% cap applies when a tenant exercises their 'Contract Renewal Request Right' (the 2+2 rule). Under this scenario, the landlord cannot increase the rent or deposit by more than 5% of the previous amount. This rule applies even if the market price has skyrocketed or if the original contract contained a clause allowing for higher increases.
2. Is an Agreement for More Than 5% Valid?
Many landlords try to persuade or pressure foreign tenants into agreeing to a 10% or 20% increase. Legally, any portion of a rent increase that exceeds the 5% limit when a renewal right is exercised is invalid. If you have already paid the excess amount, you have the legal right to claim a refund for the overpaid portion.
3. How to Calculate the 5% Increase
The 5% is calculated based on the 'Deposit' for Jeonse and the 'Monthly Rent' for Wolse. If your lease involves both a deposit and monthly rent, the conversion rate (Jeon-wol-se 전환율) set by the government must be used to ensure the combined increase does not exceed the legal limit.
4. Exceptions to the Cap
The 5% cap does NOT apply in the following situations:
- New Contracts: When you sign a lease for a new property for the first time.
- Mutual Agreement (Without Renewal Right): If you decide to stay but choose not to exercise your formal 'Contract Renewal Request Right,' you and the landlord can theoretically agree on any increase. Always specify that you are using your renewal right to trigger the protection.
5. Why Hoam Law Firm?
Landlords often assume foreigners aren't aware of the 5% cap. Hoam Law Firm helps you draft formal responses to unfair rent increase demands. We verify the calculations to ensure they comply with the Housing Lease Protection Act and represent you in mediation if the landlord threatens eviction due to your refusal to pay more than the legal limit.
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