To root out illegal acts in real estate transactions and the inflow of speculative demand, the government moved to strengthen its response system, including establishing a supervisory body for illegal real estate acts. The government plans to enact relevant laws to set up a dedicated body with investigative and prosecutorial powers and to examine all acquisitions and gift transactions of high-priced apartments worth 3 billion won or more in the Han River belt to uncover illegal acts.
According to the "measures to stabilize the housing market" announced on the 15th by the Ministry of Land, Infrastructure and Transport, the Ministry of Economy and Finance, the Financial Services Commission, the Office for Government Policy Coordination (OPC), and the National Tax Service, the government plans to pool pan-governmental capabilities and respond, including by establishing a supervisory body for illegal real estate acts under the prime minister to eradicate illegal acts in real estate.
The Ministry of Land, Infrastructure and Transport said the establishment aims to "ensure a fair and transparent transaction order for real estate, which accounts for most of people's assets, to stabilize housing and protect property rights," and noted that "in addition to traditional crime types such as price collusion and under-the-table or inflated contracts, strong responses are needed to new, more sophisticated and intelligent types such as jeonse fraud and price pumping."
Beyond planning and coordinating investigations and prosecutions related to existing illegal real estate acts, the supervisory body for illegal real estate acts will directly conduct investigations and prosecutions into insufficiently covered areas and social issues. To enable swift responses regardless of the field, region, or nature of the illegal act, a separate investigative unit will also operate within the real estate supervisory body.
To that end, the government plans to push for the enactment and revision of real estate-related laws to establish the supervisory body and grant it investigative and prosecutorial powers. Before the establishment, it will operate a "real estate supervision task force" to prepare for the launch and respond to pan-government illegal real estate acts until the body is established.
It will also build a cross-ministerial cooperation system, including by signing an information-sharing memorandum of understanding (MOU) between the Ministry of Land, Infrastructure and Transport and the National Tax Service. The ministry will carry out planned investigations and refer cases for prosecution targeting so-called "price pumping," which disrupts real estate market order through false reports followed by cancellation after a transaction, and will run a focused reporting period for the "center for reporting acts that disrupt the real estate transaction order."
By introducing special judicial police powers (special judicial police) within the Ministry of Land, Infrastructure and Transport, the government will actively respond to real estate crimes and, through legal amendments, is expected to specify the types of illegal acts that disturb the market.
To this end, the National Tax Service will conduct a full review of acquisition transactions for ultra-high-priced dwellings worth 3 billion won or more in areas adjacent to the Han River in Seoul and of gift transactions of high-priced apartments, and will also focus on inspecting brokerage offices involved in market manipulation, such as cancellations of reported transactions and false listings.
The National Tax Service will also activate information-gathering teams at seven regional offices to collect tax evasion information in overheated housing market areas, and will establish and operate a "real estate tax evasion reporting center" to respond swiftly to real estate tax evasion.
To that end, the Ministry of Land, Infrastructure and Transport will pursue a plan to share funding plans and related supporting documents with the National Tax Service in real time to use them as taxation information.
The Financial Services Commission will conduct a full survey of the actual conditions of misuse of business loans for nonapproved purposes and will strengthen inspection and supervision of cases that bypass lending regulations.
The Korean National Police Agency also plans to launch a special crackdown on real estate crime by organizing 841 police officers nationwide under the National Office of Investigation, and will push a "special crackdown on real estate crime" targeting real estate-related crimes such as price pumping, fraudulent subscriptions, and corruption in reconstruction and redevelopment.
Experts acknowledged the need for a dedicated body for illegal real estate acts to some extent but advised that sufficient discussion is needed before its establishment. Lee Eun-hyeong, a research fellow at the Construction & Economy Research Institute of Korea, said, "If the market is so murky or distorted that public intervention is necessary, there is a need to establish a dedicated body and to monitor," and added, "It is necessary to fully discuss whether the impact of illegal acts on the current domestic market situation is significant enough to require a dedicated body."
Ko Jun-seok, a chief professor at the Sangnam Institute of Management at Yonsei University, said, "Various illegal real estate acts, such as price pumping and jeonse fraud, are scattered, so the plan to manage them collectively under the Prime Minister's Office appears to be the right direction. Currently, there has been a problem of delays because illegal acts were handled through reports to the police," and added, "However, there is a concern that the measures could end up regulating even matters that do not violate market order, so rather than proceeding hastily, it seems necessary to follow legislative procedures through sufficient discussions by each ministry."