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Has anyone ever done this? My Korean friend told me that I should expect to pay about 400,000 for the cancellation

When I broke my contract, we had to find someone to take the place.  But that should be your school's problem not yours.

then around 3-400,000 for a broker fee when renting the new place.

That sounds about right, especially if you are in a big city. 


One other thing to watch out for is that IF you are taking the housing allowance, sometimes your school will not provide the key money as a deposit, so it might have to come out of your pocket.  That can be around 2 million and up.  You'll get that money back after a year. 

Generally, a lot of schools within SMOE do not provide the key money. Key money in Seoul usually range from 5 to 10 million WON with 3 million on the lower end.

With that being said, when I worked for SMOE (finished last week), my first place was just miserable. Internet was really slow and the mold was a constant problem. I managed to endure it for 2 years but decided to move my last and third year. Instead of taking the housing stipend, I decided to talk to my school about moving to a new place. I was nearing my 2nd contract, so breaking housing contract wasn't an issue. I ended up finding a nice officetel which accepted my school's responsibility over me and decided not to take any key money.

Anyways, here's some advice about finding housing in Korea.

1. Key Money
Nearly all places here require key money and usually, it starts from 5 million to 10 million. There are a few places that take 3 million but not that many. Currently, your school is under contract with the landlord, however, if you take the housing stipend, the housing will be under your name. This means that they will definitely require key money from you. My school was able to sign a contract without the key money because they can be trusted while we're just foreigners.

2. Cancellation Fee
The cancellation fee depends on what's written on the housing contract with your school and landlord. I know my previous landlord told my school that if I were cancel the contract mid-way, he would charge me one month's rent, which I would be responsible for. This is something you'd have to check with the school.

3. Real Estate/Broker Fee
Yes, usually the fee ranges from 250-400,000 WON. It depends on your rent and key money. Sometimes, you can bypass these real estate agents if you directly sign with the landlord. If you have a Korean friend willing to help you find housing, this can be done. However, most of the time, landlords go with real estate agents.

4. Short-term Contracts (단기임대)
I'm not sure where you are located but there are places in Seoul, especially Gangnam-gu and Songpa-gu that offer short-term contracts. You don't pay any key money besides the a month's rent in advance. However, most places even with key money take the first month's rent with an additional month's in advance. You just don't pay the last month. Usually, these places are pricey though. The contract starts at 3 months but you can sign for a 3-6-9-12 month lease. A lot of times, if you want one year, these places will offer a 6-month lease and let you extend every 6 months. Anyways, these places are usually starts at 600,000 WON per month. Songpa-gu is usually starts at 800,000 WON per month. They are usually fully furnished and are very comfortable.

Unless you have 5-10 million WON at your disposal, finding a new place will be difficult. There are places in Itaewon that offer decent prices but a lot of them require key money too. Your best bet in saving money would be asking the school to help you instead of taking the housing stipend. The housing stipend is 200-300,000 smaller than the housing allowance. If you talk to your school and express legitimate concern, they can help you find a new place under their name. This means, you still get your 700,000 WON for housing since it's under your school's name. Go with your coteacher to real estate agents and try to negotiate the terms that the school will take full responsibility for any breaking of the contract. This is, of course, at the mercy of your school. Seems like you're new to the school and it might be a little difficult to persuade them this early on.

However, if you insist on getting the housing stipend then you will have to prepare yourself in obtaining key money or going into those expensive short-term contracts.

Thanks at reply #2 for all the info! this will be useful for future reference. I also wasn't too pleased with my new place after changing schools, as my old place much more cleaner and modern, and in a great location with many shops and restaurants around, as compared to the new one I moved into now, but it will have to do for the year. The area i've been put in is not great! nothing much around, the only compensation is that it's within walking distance form the bus terminal.

I've just been through a similar process. The landlord of the apartment I've lived in for the last year notified my school they'd be increasing the rent from September, but as my school didn't pay any key money the rent was pretty exorbitant anyway. To save money, my school were going to move me from my large 26-pyeong 2 bedroom apartment into a 6-pyeong one room above a hof so I decided to take the housing allowance and go it alone instead. As it happens my girlfriend's contract was up on her current place so we're gonna get a place together and save some money (living together with a Korean girl before marriage is another story I won't go into here).

I didn't have to worry about any cancellation fees, but the budongsan fee for finding the new place was pretty high.  The monthly rent of our new place is 700,000 (10mil key money) and the budongsan fee was originally 780,000 before we complained and they reduced it to 560,000. They had an equation to get to the fee which included the monthly rent and key money, so you'll likely pay less than this if you're looking at smaller places.

A lot of Koreans use a cafe called Peter Pan (http://cafe.naver.com/kig) to avoid budongsan fees, allowing landlords and potential tenants to contact each other directly. Part of me wishes we'd done that to save the fee, but on the other hand it's nice to simply tell the budongsan staff your budget and let them take you around showing available properties. We spent hours trawling the web, but I reckon the majority of properties aren't listed online so I'd really recommend hitting up a few budongsan's in the area you want to live. The place we settled on wasn't listed online and is much better than what I was expecting after an initial web search.