More than half of Seoul home owners prefer monthly rent

The majority of home owners in Seoul would prefer monthly rents to the lease on deposit system currently in place due to consistently low bank interest rates. A survey conducted by the Ministry of Construction and Transportation along with other related organizations showed that more than 52 percent of home owners in Seoul would like to change their current lease so as to pay rent on a monthly basis. The ministry, the Korea Housing Corporation and 13 local governments polled a total of 310 real estate agencies about the types of rental systems currently in use. The ratio of renters seeking to shift to the monthly rent system was highest at 66 percent in Kaepo-dong, Kangnam-gu, followed by 42 percent in Nowon-gu, and 37 percent in Ilsan-gu, Koyang City. In metropolitan areas nationwide, the number of those paying monthly rent as opposed to those under the lease on deposit system rose to 37 percent from 18 percent in the latter half of 1999. The overall average was 26.3 percent, with Metropolitan Kwangju recording the lowest rate at 5.0 percent. The preference for the monthly rent system was attributed to low annual interest rates of about 6 percent for time deposits and the perception that there were no particularly high-yield instruments in which to invest ``key money.``

The monthly interest rate stands at about 1.3 percent or 15.6 percent annually, compared to the national average of 14.0 percent. The average interest rate nationwide dropped to 16 percent a year last September, 15 percent in December and 14 percent in March from 24 percent a year ago, but it is still more than double bank interest rates.

The ministry is planning to work out a comprehensive plan in cooperation with related government agencies like the Ministry of Finance and Economy to help reduce the burden on lessors amid a rapid rise in monthly rental fees and ``key money`` for leasing.

Koo Ja-Ryong bonhong@donga.com