Deposit to Monthly Rent Conversion in Korea: Legal Cap Is Base Rate + 2% (Now 5%)
Under Article 7-2 of the Housing Lease Protection Act and Article 9 of its Enforcement Decree, the conversion rate may not exceed the lower of 10% a year or the Bank of Korea base rate plus 2 percentage points.
With the base rate at 3.0% (decided October 22, 2026), the cap is 5% a year: converting ₩100 million of deposit gives at most about ₩416,667 a month.
The cap applies when a deposit is converted into rent during a lease; increases on renewal fall under the separate 5% rule.
- Deposit to Monthly Rent Calculator ›Convert part of a deposit into monthly rent and check the legal conversion-rate cap.
- Jeonse vs Wolse Calculator ›Which costs less per month: a big jeonse deposit or a smaller deposit plus monthly rent?
What the conversion rate is
The conversion rate (전월세 전환율) is the annual rate used to turn part of a deposit into monthly rent. Converting ₩100 million at 5% gives ₩5 million a year, or about ₩416,667 a month.
The legal cap
Article 7-2 of the Housing Lease Protection Act says that when a deposit is converted into rent, the rate may not exceed the lower of:
| Rule | Rate | Basis |
|---|---|---|
| ① Fixed cap | 10% a year | Enforcement Decree Art. 9(1) |
| ② Linked to base rate | Bank of Korea base rate + 2 percentage points | Enforcement Decree Art. 9(2) |
At current rates ② is lower, so when the base rate changes, the cap changes with it.
The cap right now
With the Bank of Korea base rate at 3.0% (decided October 22, 2026), the cap is 5% a year. The Bank of Korea’s Monetary Policy Board reviews the base rate regularly, so check the rate in force when you sign.
| Base rate | Cap |
|---|---|
| 2.5% | 4.5% |
| 3.0% | 5.0% |
| 3.5% | 5.5% |
Calculate it with the deposit to monthly rent calculator
The formula
Monthly rent = converted deposit × rate ÷ 12. The reverse is deposit = monthly rent × 12 ÷ rate. At the 5% cap:
| Deposit converted | Rent per year | Rent per month (cap) |
|---|---|---|
| ₩50 million | ₩2.5 million | about ₩208,333 |
| ₩100 million | ₩5 million | about ₩416,667 |
| ₩200 million | ₩10 million | about ₩833,333 |
When the cap applies
| Situation | Rule |
|---|---|
| Part of the deposit converted into rent during the lease | Conversion cap (Art. 7-2) |
| Request to raise rent or deposit | 5% cap, no new request within 1 year (Art. 7, Decree Art. 8) |
How much can rent go up? The 5% rule
Common questions
Q. At 4%, what is ₩100 million in monthly rent?
A. ₩100,000,000 × 4% ÷ 12 ≈ ₩333,333 a month.
Q. The landlord wants a higher rate than the cap. What can I do?
A. For a conversion during the lease, rent above the cap has no effect, because Article 10 of the Act voids terms that breach the Act to the tenant’s disadvantage. If you cannot agree, apply to the Housing Lease Dispute Mediation Committee.
Q. Where do I check the base rate?
A. On the Bank of Korea website (bok.or.kr), which lists the rate by decision date. Our calculator also shows the latest decision.
Official source (Korean): https://www.law.go.kr/법령/주택임대차보호법
This guide explains Korean law in general terms and is not legal advice. Laws change, so check the official text before you act.
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