South Korea Commercial Rent Increase Rules: 5% Cap, Conversion Rates, and 10-Year Renewal Context
Guide to commercial rent increase regulations in South Korea including the 5% cap on renewals, jeonse-wolse conversion rates for commercial leases, and decre...
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Commercial rent increases in South Korea are regulated under the Commercial Building Lease Protection Act with the same 5% cap as residential leases, but the longer renewal period (10 years) and higher conversion rates create important practical differences.
Commercial Rent Review Process in national
Review Rent Clause
Check the specific rent review method in the commercial lease.
Calculate New Amount
Apply the agreed formula to calculate the adjusted rent.
Serve Written Notice
Provide written notice per the lease’s required notice period.
Commission Valuation if Needed
Obtain an independent market rent valuation for market review clauses.
The 5% Cap (Art. 11)
vs. Residential
When the Cap Applies / Does Not Apply
Applies: Agreed renewals, statutory renewal requests, mid-term increases
Does not apply: New contracts with new tenants, post-10-year renegotiations
Conversion Rates (Deposit ↔ Monthly Rent)
Commercial leases have higher conversion rate caps than residential leases:
Tenant's Right to Request a Decrease
Commercial tenants may request rent decreases when economic conditions change (area decline, market downturn). This right applies regardless of converted deposit thresholds.
Consequences of Exceeding the Cap
- Excess is automatically void
- Overpaid amounts reclaimable as unjust enrichment
- Commercial Building Lease Dispute Mediation Committee may resolve disputes
Best Practices for Landlords
- Calculate increases precisely — amounts above 5% are void
- Observe the 1-year rule — no re-increase within 12 months
- Prepare market evidence — comparable commercial rents, tax changes
- Apply the correct conversion rate — commercial rate is higher than residential
- Plan for post-10-year negotiations — the 5% cap ceases after the renewal period expires
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