![Rental listings are posted at a real estate agency in Eunpyeong-gu, Seoul. [Herald Business DB]](https://wimg.heraldcorp.com/news/cms/2026/07/30/news-p.v1.20260722.a3eec8ef921243f59f289bda51e16ba3_P1.jpg)
An 84-square-meter unit at Banpo Xi in Banpo-dong, Seocho-gu signed a new lease Wednesday at a deposit of 100 million won with monthly rent of 7.4 million won (fifth floor). That compares with a lease on the same floor area signed last August at the same deposit but with monthly rent of 5.14 million won (20th floor), meaning monthly rent climbed 2.26 million won, or 44 percent, in a year.
Average monthly rent for Seoul apartments is approaching 1.6 million won ($1,100) amid growing concern that a government push to raise property holding taxes on high-value homes and multi-unit owners could once again push costs onto tenants. The last time the government sharply increased the comprehensive real estate tax, Seoul apartment rents rose by nearly double digits, and analysts warn the pattern could repeat.
The Democratic Party of Korea and the government held a closed-door policy meeting Thursday at the National Assembly members' office building in Seoul to finalize the second-half tax reform package, with a real estate property tax increase emerging as the central issue.
President Lee Jae Myung directly raised the prospect of higher property taxes at a public forum on real estate policy on July 23, saying, "If we had normalized holding taxes in the past, prices would not have risen this far." He added that rates would need to rise "at least threefold" to reach the level typical of advanced economies.
The government is reviewing whether to include a plan to raise the fair market value ratio for the comprehensive real estate tax in the 2026 tax reform package, set for release next month. Under the proposal being discussed, the ratio — currently at 60 percent — would rise to 70 percent for single-home owners and 80 percent for those with multiple properties. The government is also considering applying the heavy tax rates previously reserved for owners of three or more homes to high-value properties held by owners of two or fewer units.
The real estate industry is watching closely, given how property tax increases played out in the past. The Moon Jae-in administration raised comprehensive real estate tax rates and introduced surcharges on multi-unit owners through its Sept. 13, 2018 measures. The fair market value ratio used to calculate the tax base rose by 5 percentage points each year — from 80 percent in 2018 to 85 percent in 2019, 90 percent in 2020 and 95 percent in 2021. By 2021, the top comprehensive real estate tax rate for multi-unit owners stood at 6 percent, applied against a 95 percent fair market value ratio.
Monthly rents climbed sharply over the same period. According to Korea Real Estate Board data, average monthly rent for Seoul apartments rose from 1.09 million won in June 2019 — the first month the 85 percent fair market value ratio took effect — to 1.12 million won in June 2020.
After the July 10, 2020 measures raised the top comprehensive real estate tax rate for multi-unit owners from 3.2 percent to 6 percent, the pace of rent increases accelerated further. Average monthly rent in Seoul jumped from 1.14 million won in June 2021 to 1.21 million won the following month — a gain of 73,000 won — as the higher rate and the 95 percent fair market value ratio took effect together. By June 2022, the average had reached 1.26 million won, up 10.9 percent from a year earlier. The number of households subject to the residential comprehensive real estate tax surged to 947,000 in 2021, with total assessed tax jumping to 5.7 trillion won.
Market participants expect that if property taxes are raised again — at a time when Seoul rents are already at record highs and jeonse units are rapidly converting to monthly-rent contracts — upward pressure on both jeonse and monthly rents will intensify, particularly in high-end neighborhoods and rental properties held by multi-unit owners.
Korea Real Estate Board data show average monthly rent for Seoul apartments reached 1.59 million won in June, up 170,000 won, or 12 percent, from 1.42 million won in June 2025. After crossing the 1.5 million won threshold for the first time in January at 1.5 million won, rents rose every month — to 1.51 million won in February, 1.53 million won in March, 1.54 million won in April and 1.57 million won in May.
Experts say that in a market where rental housing supply is already tight, a significant share of any property tax increase is likely to be passed on to tenants through higher deposits and monthly rents.
A 2022 study by a research team led by Song Heon-jae, a professor of economics at the University of Seoul, found that for every 1 percent increase in a landlord's property tax burden, between 29.2 and 30.1 percent of the increase was passed on through jeonse deposits. The pass-through rate for monthly rent was even higher, at 46.7 to 47.3 percent. "When property taxes rise, the cost of supplying rental housing increases, and it is a natural economic outcome that part of that burden is transferred to tenants," Song said.
Kim In-man, head of the Kim In-man Real Estate Economic Research Institute, said three forces are converging on the market at once: the government's push to phase out jeonse, the prospect of higher property taxes, and a shortage of new move-in supply. "With all three factors working simultaneously, it would actually be strange if monthly rents did not rise," he said. He added that the interest of large foreign investors such as Morgan Stanley in entering the domestic rental market reflects expectations of strong growth potential in Korea's monthly-rent sector.
The head of a real estate agency in Banpo-dong, Seocho-gu, said wealthy clients have increasingly been reluctant to tie up large sums in deposits as they allocate more capital to shares and other investments. "Contracts with lower deposits and higher monthly rents are becoming more common, and if property taxes rise on top of that, there is a real possibility of a sharp jump in monthly rents in the second half of the year," the agent said.
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