Leasing an office, shop or warehouse in Korea: the law and the traps

Foreign businesses lease Korean premises for three reasons: because the company needs a registered address, because the business needs space — an office, a showroom, a shop, a warehouse — and because immigration needs to see that the investor’s company is real. The D-8 visa in particular asks for independent premises; a virtual office does not do. See our guides to registered addresses, virtual offices and D-8 requirements.

The legal framework is the lease chapter of the Civil Act, overlaid for business premises by the Commercial Building Lease Protection Act — the CBLPA — which was last amended in 2026, with the regional thresholds unchanged. The Act protects tenants in ways the Civil Act does not, but how much protection a lease gets depends on its size and location.

Does the Act apply?

The CBLPA applies to leases of buildings used for business that requires business registration — offices, shops, warehouses, workshops — whatever the business. Its full protection applies only where the converted deposit (환산보증금, hwansan bojeunggeum) — the deposit plus monthly rent multiplied by 100 — does not exceed the regional threshold set by enforcement decree:

Enforcement Decree of the Commercial Building Lease Protection Act. Rent excluding VAT is the safer basis where the lease is near the line.

A Seoul office with a KRW 100 million deposit and KRW 5 million monthly rent converts to KRW 600 million — inside the threshold. A Grade A floor in Gangnam at KRW 30 million a month converts to well over KRW 3 billion — far outside it. Most small offices, shops and showrooms are inside; most large offices and logistics warehouses are outside. Leases of serviced and virtual offices are usually service agreements rather than leases of a building, and get little or no protection under the Act.

What every business tenant gets

Under Article 2(3), certain protections apply even above the threshold:

• Opposability (대항력) under Article 3: once the tenant has possession and has applied for business registration at the premises, the lease binds a new owner from the next day. A sale of the building does not end the lease.
• The renewal right under Article 10: the tenant may request renewal between six and one month before the end of the term, and the landlord must accept unless a statutory reason applies — rent arrears of three periods, serious breach, unauthorised subletting, the tenant’s fraud, reconstruction notified in the contract, and similar. Requests are possible until the total term reaches 10 years.
• Key-money protection under Articles 10-3 to 10-7: the landlord may not obstruct the tenant from recovering key money (권리금, gwolligeum) from a new tenant it introduces, from six months before the end of the lease, on pain of damages.
• Termination for arrears only after three periods of rent are unpaid, under Article 10-8.
• The tenant’s right to terminate where government restrictions on business, such as those used during the pandemic, force the business to close, under Article 11-2.

One trap for large leases: the Supreme Court has held that a lease above the threshold with no fixed term gives the tenant no renewal right at all, because the right presupposes an end date (2021다233730). Every lease should state a term.

What only smaller leases get

Below the threshold the tenant also gets: priority for the deposit over later creditors in an auction of the building if it has a fixed-date stamp (확정일자, hwakjeong ilja) from the tax office under Article 5; top-priority repayment of a small deposit; a court lease registration order (임차권등기명령, imchagwon deunggi myeongnyeong) under Article 6 to keep its rights when it moves out without getting the deposit back; a minimum one-year term and tacit renewal; and a cap on rent increases of 5% a year under Article 11. Above the threshold, rent on renewal is negotiated or, failing agreement, decided by a court under the Civil Act’s general rule on changed circumstances.

The practical consequence is about the deposit. Above the threshold a deposit worth many months of rent is an unsecured claim against the landlord. If the building is mortgaged and sold at auction, the bank is paid first. Large tenants therefore check the land register carefully, negotiate a registered lease right (전세권, jeonsegwon) or a guarantee, or keep the deposit lower in exchange for higher rent.

Before signing: the registers

Two public registers decide whether a lease is safe and whether the premises are usable. The land register (등기사항전부증명서, deunggi sahang jeonbu jeungmyeongseo), issued the same day, shows who owns the building and every mortgage, provisional seizure and lease right on it; compare the owner with the person signing and add up the secured debt against the building’s value. The building register (건축물대장, geonchungmul daejang) shows the permitted use of each unit and whether the building is marked as having unauthorised construction (위반건축물, wiban geonchungmul).

Permitted use matters more than foreign tenants expect. An office business can register in a unit classified as business facilities, or as a neighbourhood living facility used as an office within area limits; a restaurant, clinic, academy or shop needs the right class of neighbourhood living facility; a warehouse needs warehouse use; manufacturing needs factory use. If the use does not fit, the tax office may refuse the business registration, the licensing office the permit, and immigration the D-8. Unauthorised extensions can bring fines on the owner and complications for the tenant’s licences. Ask the agent for both registers before negotiating, not before signing.

Offices: how the market works

Korean office rents are quoted per 3.3 square metres — one pyeong (평, pyeong) — of leased area, which includes a share of common areas; the efficiency ratio (전용률, jeonyongnyul) of usable to leased area is often only 50–60% in prime towers, so compare costs per usable metre. A monthly management fee (관리비, gwallibi) covers common areas and services and is charged on the same leased area; utilities inside the unit are extra. Deposits are commonly around ten months’ rent in office buildings, more in smaller buildings, and VAT of 10% applies to rent and management fees.

The prime market has been tight: Grade A vacancy across Seoul’s three main business districts was 4.2% in the second quarter of 2026, with Gangnam lowest. In that market landlords give less: rent-free months and fit-out contributions exist for long leases and large floors, but small tenants should expect standard terms. Outside the prime towers, and in logistics — where vacancy was 14.6% in the same quarter — there is more room to negotiate. A broker’s fee for a non-residential lease is capped at 0.9% of the converted transaction value and is usually split by negotiation.

Shops, showrooms and key money

Street-level retail brings two things offices rarely do: key money and permitted-use questions. Key money is paid by an incoming tenant to the outgoing one for the location, goodwill, customers and fit-out; it is not paid to the landlord and not returned by it. The CBLPA protects the outgoing tenant’s chance to recover it from a new tenant, but the incoming tenant buys a private bargain with no statutory guarantee of value. Document what the key money buys — equipment, fit-out, a business — and do not pay it before the landlord has agreed the new lease.

Food, beauty, health and education businesses need specific licences and a matching building use, and some need floor-area or fire-safety conditions under the laws on multi-use establishments. Signage needs a permit from the district office, and outdoor advertising in some districts is limited in size and lighting. Neighbouring tenants may have exclusivity clauses for their trade; ask the landlord, and seek your own if the location depends on it.

Warehouses and logistics space

Logistics leases are usually above the CBLPA thresholds and are negotiated as commercial contracts. The terms that matter are floor loading, clear height and dock doors, temperature zones and back-up power for cold storage, hazardous-goods restrictions, the landlord’s fire insurance and the tenant’s contents insurance, responsibility for racking and its removal, and rent reviews. A company storing other people’s goods for a fee may also need to register a logistics warehouse business under the Logistics Facilities Act, depending on the size of the space. For importers of food, cosmetics or medicines, the warehouse must meet the product regulator’s storage rules; see our guides to food imports and pharmaceutical imports.

Negotiating the commercial terms

The statute sets the floor; the lease sets everything else. The terms worth negotiating in Korea are the familiar ones, with local habits. Rent-free periods (렌트프리, renteu peuri) are expressed in months per year of term and are common for longer office leases; landlords prefer them to lower headline rents, which affect building valuations. Rent escalation is usually a fixed annual percentage rather than an index. Fit-out periods, landlord contributions and who owns the fit-out at the end should be written into the lease, together with the restoration standard. Parking allocations, signage rights, after-hours air-conditioning charges and access for deliveries are cheap to agree before signing and expensive to argue about later.

Foreign tenants often ask for a break option. Korean landlords grant them reluctantly, usually after a minimum period and against a penalty of several months’ rent; the alternative is a right to assign or sublet to a group company or a buyer of the business with the landlord’s consent not to be unreasonably withheld. For a company whose Korean plans are uncertain, a shorter initial term with renewal rights — which the Act protects — is often a better tool than a long term with a break.

Taxes and accounting

Rent and management fees carry 10% VAT, invoiced by the landlord on an electronic tax invoice; a VAT-registered tenant recovers it. The deposit itself is not taxed in the tenant’s hands, but the landlord pays VAT and income tax on a deemed rent calculated on deposits, which is one reason landlords price deposits and rent as they do. Rent is a deductible expense for the Korean company. A foreign group reporting under IFRS will recognise the lease on balance sheet at the group level; the Korean company’s statutory accounts follow Korean standards, which for many small companies means simpler treatment. Fixed-date stamps and business registration are free; broker fees carry VAT.

When things go wrong

Most lease disputes settle, and Korea offers a cheap step before court: the Commercial Building Lease Dispute Mediation Committee (상가건물임대차분쟁조정위원회, sangga geonmul imdaecha bunjaeng jojeong wiwonhoe), set up under Article 20 of the Act and run through the Korea Legal Aid Corporation and regional bodies, mediates disputes over rent, deposits, renewal, key money and restoration. Its proposals bind if both sides accept them. Deposit claims can also go through a payment order — a fast written procedure — or a small-claims action where the amount allows. A tenant whose deposit is not returned at the end of a lease below the threshold should apply for a lease registration order before moving out, so that opposability and priority are not lost when it gives up possession.

Landlord insolvency is the scenario foreign tenants least expect and Korean ones most fear. If the building is auctioned, a tenant with opposability stays until its lease ends or is paid out; a tenant with a fixed-date stamp below the threshold is paid in the order of its stamp; others claim as unsecured creditors. That ranking is decided by dates on documents, which is why business registration and the fixed-date stamp should happen on the day of moving in, not the month after.

Restoration on exit

Most disputes at the end of a Korean lease are about restoration (원상복구, wonsang bokgu) — what the tenant must remove and rebuild before the deposit comes back. The default rule, from the Supreme Court’s 1990 judgment (90다카12035), is that the tenant restores what it changed, to the state in which it received the premises — not the bare shell, and not what earlier tenants installed. But the Court held in 2019 (2017다268142) that a tenant who takes over a predecessor’s business, name, fit-out and terms may inherit the predecessor’s restoration duty. Prime office buildings often write in a stricter standard: return to the base-building condition, at the tenant’s cost, by the landlord’s contractor.

Define the standard in the lease; attach a schedule of the condition on handover with photographs; agree in writing which installations may stay; and get the landlord’s written acceptance of the restored space before handing over keys. The deposit is due on return of the premises, but landlords routinely deduct restoration costs and unpaid charges; the cleaner the record, the shorter the argument.

The deposit is ten months’ rent and unsecured. Read the land register as if it were your bank statement.

Voixa Korea

Serviced offices and shared space

Serviced offices and co-working centres sell flexibility: a desk or a private room with furniture, internet, reception and meeting rooms, on terms of months rather than years, and often an address for business registration. Legally they are usually licences or service agreements rather than leases of a building, so the CBLPA’s protections — opposability, renewal, deposit priority — rarely apply, and the operator’s terms decide what happens if it raises prices, relocates the client or fails. They work well for a first year, a sales office or a project team. For a D-8 investor, immigration looks at whether the space is a genuinely independent office used by the company; a dedicated private room under a written agreement may be accepted where a hot desk or mail-handling address will not. Ask before you sign, and keep the agreement, floor plan and photographs for the visa file.

Signing as a foreign company

Sign in the name of the Korean company once it exists, not in the founder’s personal name; if the lease must be signed before incorporation — often the case, because the registered address is needed to incorporate — include a clause allowing assignment to the new company and the landlord’s consent to business registration at the address. The Korean text of the contract prevails in practice, so get a translation reviewed rather than relying on an English summary. Sublets need the owner’s written consent under Article 629 of the Civil Act, so a tenant renting from another tenant should see that consent. Pay the deposit only to the owner’s own account, against a receipt, and register for business and stamp the lease at the tax office the same week.

A worked example

A French design studio forms a Seoul company and needs an office that will satisfy immigration for its founder’s D-8. It finds a 25-pyeong unit in Seongsu at a KRW 50 million deposit and KRW 3.5 million a month — a converted deposit of KRW 400 million, well inside the Seoul threshold. The building register shows second-class neighbourhood living facility, office use, and no unauthorised construction; the land register shows one mortgage of modest size against a building worth many times more.

The lease is signed by the founder with an assignment clause, assigned to the company on incorporation, and stamped with a fixed date at the tax office together with the business registration. The handover schedule records bare walls and a ceiling installed by an earlier tenant, which the landlord confirms may stay. Five years later the studio moves to a larger space, restores only what it built, and receives its deposit back in full within a week.

Mistakes we see

1. Paying a deposit without reading the land register issued that day.
2. A unit whose permitted use does not fit the business, discovered at business registration.
3. A large lease with no fixed term, losing the renewal right.
4. No fixed-date stamp on a lease that qualified for deposit priority.
5. An undefined restoration clause and no handover photographs.
6. Renting from a tenant without the owner’s written consent.
7. Signing personally with no right to assign to the company.

Korean terms you will meet

Questions readers ask

About the author

Alexander Baranov

Founder of the BCA Group · cross-border corporate and tax adviser since 2008

Alexander advises foreign founders and groups on company formation, tax structuring and corporate law in more than 40 jurisdictions across Europe, the Gulf, Asia and Latin America. He is the author of nine books on international business and tax and writes regularly for professional finance and tax journals. He works in English, German, Spanish and Russian.

This guide is based on the Korean statutes cited in the text and on our own filings. It is reviewed when the law or official rates change.

Ask Alexander on WhatsAppContact