Rent Poor
Overview
Rent Poor is a term referring to a class for whom housing costs (monthly rent, maintenance fees, etc.) account for an excessively high share of income, making it difficult to maintain basic living with the remaining income. Whereas "House Poor" refers to a class that owns a home but has become impoverished due to the burden of loan repayment, Rent Poor refers to a class that does not own a home and is pressed by rental cost burdens. If the housing cost ratio exceeds 30% of income, it is classified as "Rent Burdened," an internationally used indicator.
Main Content
Concept and Definition
Rent Poor is defined in two main aspects. First, by an absolute standard, it is when the rent-to-income ratio (RIR) exceeds 30%. Second, by a relative standard, it is when the income remaining after housing expenditure falls below the minimum living cost, placing the household in a state of substantive poverty. The U.S. HUD (Department of Housing and Urban Development) classifies above 30% of income as "burdened" and above 50% as "severely burdened."
Background
The Rent Poor problem stems from structural changes in housing prices and the jeonse (전세)/monthly rent market. Under a low-interest-rate trend, the "conversion of jeonse to monthly rent" accelerated, and with housing supply shortages overlapping with population concentration, large-city rents repeatedly outpaced income growth. In particular, young adults, single-person households, and older adults are vulnerable to housing cost shocks due to low income stability.
Social and Economic Impacts
The Rent Poor class experiences "consumption pressure," reducing essential spending such as food, medical care, and education due to housing cost burdens. This leads to contraction of domestic demand, and housing instability is intertwined with demographic issues such as avoidance of marriage and childbirth and young adults' departure from the Seoul metropolitan area. In addition, increased residential mobility due to frequent moves raises social costs, and the possibility of intergenerational transmission of housing poverty is also raised.
Related Indicators
- RIR (Rent-to-Income Ratio): Monthly rent divided by monthly income
- PIR (Price-to-Income Ratio): An indicator of the burden of purchasing a home
- Share of households with excessive housing cost burden: The proportion of households with RIR exceeding 30% among all households
Policy Responses
Countries implement various policies such as expanding public rental housing, housing benefits (housing vouchers), rent caps, and jeonse loan support. In Korea, representative examples include the housing benefit system, expansion of public rental housing supply, and jeonse loan support for young adults and newlyweds. However, the balance between expanding supply and stabilizing the rental market, and fairness in selecting policy targets, remain major tasks.
Latest Trends
In 2024–2025, as the high-interest-rate trend prolonged, interest burdens on jeonse loans increased and risks of jeonse deposit return (guarantee accidents) expanded, bringing the Rent Poor issue into a new phase. As cases of jeonse fraud damage and unreturned deposits emerged as social issues, "jeonse risk" deepened tenants' housing insecurity, and accordingly, conversion to monthly rent and semi-jeonse contracts are on the rise. In Korea, statistics have been published since 2024 showing that the proportion of households with "excessive housing cost burden" rose, centered on young adults, and the government is pursuing expansion of public rental housing volumes, supply of rental housing for young adults, and easing of housing benefit eligibility standards. In addition, due to the increase in single-person households and aging, the housing stability problem of older tenants is also being highlighted.
Related Topics
- [[House Poor]]
- [[Excessive Housing Cost Burden]]
- [[Conversion of Jeonse to Monthly Rent]]
- [[Public Rental Housing]]
- [[Housing Benefit]]