As anxiety in the real estate market spreads, the card to limit promotions for public officials who own multiple dwellings has been brought back after five years. As controversies such as gap speculation (purchases with jeonse tenants in place) by public officials who design dwelling policy have recently erupted, the opposition party argued that limiting promotions for public officials who own multiple dwellings is necessary to raise policy credibility. However, given property rights restrictions and effectiveness, there will likely be considerable friction before limits on promotions for public officials with multiple dwellings or the introduction of a real estate blind trust system are implemented.
According to the government and the National Assembly on the 31st, Minister Kim Yun-duk of the Ministry of Land, Infrastructure and Transport said at the comprehensive audit of the Land Infrastructure and Transport Committee of the National Assembly held on the 29th that Lee Jae-myung, the president, "had talked in the past about limiting promotions for public officials who own multiple dwellings," in response to a question by Kim Hee-jung of the People Power Party asking to review introducing the system. Kim said, "I think positively about (the president's) remarks at the time, and I will tell you whether it will be reflected in policy after gathering opinions."
In addition, when Rep. Kim asked, "The president requested the introduction of a real estate blind trust system in 2020 and even said he would request legislation. Will you try to push it as a government bill?" Minister Kim said, "I will review it." The real estate blind trust system forces senior public officials or lawmakers to sell or place in blind trust all real estate except for one dwelling for residential use. However, according to the Ministry of Land, Infrastructure and Transport (MOLIT), Minister Kim was said to have stated at the "Aviation Day" event that matters such as limiting promotions for public officials who own multiple dwellings or introducing a real estate blind trust system are not to be decided at the MOLIT level.
The mention of limiting promotions for public officials who own multiple dwellings and introducing a real estate blind trust system stems from the recent instability in the real estate market. After the Oct. 15 real estate measures, even end users have found it hard to buy homes through loans, bringing into question how the senior public officials who designed these policies acquired their dwellings.
Kim Yong-beom, the presidential office's Presidential Chief of Staff for Policy, Koo Yun-cheol, deputy prime minister and Minister of Economy and Finance, Lee Sang-kyung, former first Vice Minister of the Ministry of Land, Infrastructure and Transport, Lee Eog-weon, chair of the Financial Services Commission (FSC), and Lee Chan-jin, governor of the Financial Supervisory Service, who led this real estate policy, faced backlash after it emerged they had secured high-priced dwellings through loans or gap speculation. Ultimately, the former vice minister resigned over the gap speculation controversy and for saying, "Buy a house when the market stabilizes." Afterward, the opposition party said, "It is wrong for policy designers to buy homes through gap speculation or loans and then call ordinary people speculators."
It has been about five years since limits on promotions for public officials who own multiple dwellings were discussed. Even during the surge in home prices in 2020, the government recommended that public officials with multiple dwellings sell their properties, and some local governments took measures to restrict promotions if an official owned several dwellings. The decision aimed to strengthen the integrity of the public officials who make policy, thereby boosting policy credibility and stabilizing the real estate market. During the Moon Jae-in administration, as home prices failed to cool despite successive real estate policies, former Prime Minister Chung Sye-kyun recommended that not only senior public officials with multiple dwellings but also Director General-level public officials sell their dwellings. At the time, Chung said, "This will not pass quickly. The situation is serious, and it is a time when senior public officials must lead by example," adding, "Take measures so that those with multiple dwellings sell as soon as possible."
At the time, local governments also restricted promotions for those with multiple dwellings. President Lee Jae-myung, while serving as Gyeonggi governor in 2020, declared "demerits in personnel evaluations for multiple dwelling ownership." Gyeonggi Province did not promote a single person with multiple dwellings in the promotions for grade 4 and above effective Jan. 1, 2021. However, Gyeonggi Province currently does not restrict promotions for those with multiple dwellings. The Seoul Metropolitan Government likewise decided in 2021 to exclude in principle from consideration for senior public official promotions those with multiple dwellings, those with fake resident registrations, and those with criminal records. At the time, Seoul Mayor Oh Se-hoon said, "Real estate speculation, sex crimes, and drunk driving by senior public officials are directly connected to the morality of the public service and citizens' trust, so a more rigorous personnel vetting system must operate."
Although Minister Kim mentioned limiting promotions for public officials with multiple dwellings, sufficient discussion appears necessary before it is reintroduced. While strengthening public officials' integrity could make real estate policy more persuasive, some argue that uniformly restricting public officials' property is an excessive infringement on property rights. As many public officials did not sell their homes even when a recommendation to dispose of multiple dwellings for senior officials was made five years ago, controversy over effectiveness remains.
A real estate expert said, "It will not be easy to introduce measures that force public officials to dispose of dwellings, such as a real estate blind trust, because of infringements on private property rights," adding, "While it is possible to encourage or recommend selling dwellings by limiting promotions for those with multiple dwellings, that could lead people to choose their homes over their positions, and capable talent may avoid entering public office, creating side effects."