The government will launch a focused probe into illegal real estate activities, centering on all of Seoul and 12 areas in Gyeonggi that are bound by the 10·15 real estate measures as regulated area and land transaction permit zones.
According to the Ministry of Land, Infrastructure and Transport on the 27th, the government will expand the real estate planning investigation and on-site inspections currently being conducted mainly in Seoul to cover all of Seoul and 12 areas in Gyeonggi, starting with the investigation of real estate transactions from September to October. Areas such as Dongtan in Hwaseong and Guri, where a balloon effect is feared due to the designation of regulated areas, will also be included in the inspections.
The Ministry of Land, Infrastructure and Transport (MOLIT) said this was a decision to prepare for concerns that abnormal transactions disturbing market order—such as violations of land transaction permit rules or expedient loans and gifts—could expand as land transaction permit zones are widened and market-stabilizing measures such as tighter lending regulations take full effect.
The Ministry of Land, Infrastructure and Transport (MOLIT) will focus on checking violations of obligations related to land transaction permits through this investigation. Those seeking permission for dwelling transactions within land transaction permit zones must explain, through submissions such as the permit application and land use plans, that they can move in within four months from the permit date and actually reside for two years after acquiring the dwelling. MOLIT plans to check whether there were false reports of contract dates and the like to evade land transaction permits for contracts concluded on or after the 20th, and also conduct on-site inspections to verify compliance with the actual residence obligation.
MOLIT will also look into expedient funding, including the use of corporate funds. It plans to focus on acts that disturb the market through expedient financing, such as using corporate funds (business loans intended as operating funds for corporations) to evade lending regulations or purchasing dwellings with funds improperly gifted by parents.
To that end, MOLIT will check the entries in funding plan forms—such as financial institution loans and borrowing fund between related parties—and supporting documents, and if suspicious signs of tax evasion or illegality are found in the funding process, it will include them in the planning investigation and thoroughly verify them by requesting separate explanatory materials.
The Financial Services Commission (FSC) and the Financial Supervisory Service will continue inspections on the actual use of business loans in the financial sector for purposes other than intended and on violations of lending regulations and circumvention cases. They will also continue monitoring for any balloon effects or circumvention cases in online investment-linked finance and in the lending industry, which have been cited as channels for indirect lending.
The National Tax Service plans to further strengthen on-site monitoring by collecting transaction trends and tax evasion information on real estate transactions in newly designated land transaction permit areas and in areas showing balloon effects due to regulations. In particular, it will focus on checking whether there are acts of underreporting, such as acquiring expensive apartments with funds improperly supported by parents by taking advantage of pre- and post-regulation market conditions, and will conduct stern investigations if underreporting is confirmed.
Meanwhile, as a result of a planning investigation into abnormal dwelling transactions in Seoul from March to April, MOLIT uncovered 317 transactions (376 suspected illegal acts) suspected of violations such as expedient gifts, misuse of loan funds for purposes other than intended, and false reporting. In a planning investigation into direct transactions between related parties for transaction reports filed from January to February, 264 transactions (304 suspected illegal acts) suspected of violations were found.
Cases subject to detection included purchasing an apartment for 5.45 billion won while borrowing 3.17 billion won from a corporation in which the buyer is a shareholder, and purchasing a 4 billion won apartment from parents while signing a jeonse contract with a 2.5 billion won deposit that lists the parents as tenants.
MOLIT is receiving reports on overall acts disturbing real estate transaction order—such as price collusion, price manipulation (including pumping up prices), and illegal labeling and advertising of online brokerage listings—through the "Integrated reporting center for illegal real estate activities." It plans to respond sternly to reported cases in cooperation with local governments and others.
Kim Gyu-cheol, the Ministry of Land, Infrastructure and Transport's head of dwellings and land policy, said, "We plan to thoroughly block illegal acts such as false reporting and expedient transactions so that the foundation for stabilizing the real estate market is not shaken," adding, "If illegal acts are uncovered, we will respond strictly with a zero-tolerance principle in cooperation with relevant agencies."