From now on, all 'funding processes' must be disclosed when purchasing a house worth over 600 million won

Mandatory Submission of Fund Procurement Plan for Nationwide Home Purchases Over 600 Million Won Starting from the 13th
Fund Procurement Plan Also Required for Subscription and Sale of Pre-sale Rights When Meeting Price Criteria

Contracts Before the 13th Not Subject to This... To Be Submitted Together with Actual Transaction Report

[Asia Economy Reporter Lee Chun-hee] Starting from the 13th, when signing a contract to purchase a house priced at 600 million KRW or more nationwide, it is mandatory to submit a fund procurement plan. In particular, when buying a house worth more than 900 million KRW in a speculative overheated district, objective supporting documents must also be attached accordingly.

On the 10th, the government held a Cabinet meeting and passed a partial amendment to the Enforcement Decree of the "Real Estate Transaction Report Act," which includes these provisions. The amended enforcement decree is scheduled to be promulgated and enforced simultaneously on the 13th, and the related enforcement rules containing the details will also be promulgated and enforced together.

This amendment to the enforcement decree is the final follow-up measure of the December 16 real estate policy announced last year. The main point is to expand the scope of mandatory submission of the fund procurement plan, which was previously limited to houses priced at 300 million KRW or more in speculative overheated districts, to include houses priced at 300 million KRW or more in adjusted areas and houses priced at 600 million KRW or more nationwide.

The Ministry of Land, Infrastructure and Transport will immediately deploy the "Real Estate Market Illegal Activities Response Team" to investigate fund procurement plans starting from the 13th. The ministry will conduct high-intensity planned investigations in areas of concern for overheating, especially in Incheon and the southern part of Gyeonggi Province. Additionally, high-priced houses in speculative overheated districts, for which submission of supporting documents is mandatory, will be designated as subjects for intensive management of abnormal transactions, and investigations will begin immediately upon submission of the fund procurement plan.

Buyers are facing an emergency in fund procurement. Real estate communities and related KakaoTalk group chats are flooded with questions such as "Can I write in the plan that I took out a credit loan?" and "Should the bank account balance be savings or cash?"

The most concerned are those waiting for subscription opportunities. A Ministry of Land official explained, "The submission of fund procurement plans already included subscription contracts within the existing scope," and that subscription housing is also included in the expanded scope this time. However, since it takes about three years until the move-in date when the final payment is made, there are many complaints about the difficulty of establishing an accurate procurement plan. Mr. Choi (33) expressed his frustration, saying, "Loan regulations changed just last month, so are we supposed to predict loan regulations three years from now and write accordingly?"

Let's understand the changed regulations through a Q&A.

- Does the regulation apply to housing purchase contracts made before the enforcement date?

▲ No. Contracts signed before the 13th are not subject to this regulation. However, if a contract date or other details are falsely reported to avoid submitting the plan and this is detected, a fine of 2% of the acquisition price will be imposed. Also, a fine of 5 million KRW will be imposed if supporting documents are not submitted.

- What is the procedure for submitting the fund procurement plan and supporting documents?

▲ When a licensed real estate agent submits the actual transaction report, the plan and supporting documents are submitted together. The buyer can also submit them separately from the transaction report. Submission can be made by visiting the reporting authority directly or through the Internet Real Estate Transaction Management System in the form of image files.

- What are the strengthened regulations on the fund procurement plan?

▲ Until now, it was sufficient to state the method of fund procurement such as gift, inheritance, or cash procurement, but from now on, the specific procurement process must be disclosed. For example, in the case of gift or inheritance, both the provider of funds and the amount must be specified. The payment methods such as account transfer, deposit or loan succession, and cash payment must also be detailed. If cash payment is made, the specific reason must be indicated.

- What supporting documents are required when purchasing a house over 900 million KRW in a speculative overheated district?

▲ For deposits, a "Certificate of Deposit Balance" must be submitted; for gifts or inheritance, "Gift or Inheritance Tax Return" and similar documents are required. In the case of company support funds or private loans, documents proving the borrowing of money must be submitted. If the purchase price is covered by selling held stocks, a "Stock Transaction Statement" must also be attached. However, supporting documents need only be submitted for the items checked in the plan as the method of fund procurement.

- Which speculative overheated areas require mandatory submission of supporting documents for purchases over 900 million KRW?

▲ All areas within Seoul city are subject. Outside Seoul, the areas include Gwacheon, Hanam, Gwangmyeong, Bundang-gu in Seongnam City in Gyeonggi Province, Suseong-gu in Daegu, Sejong, and a total of 31 locations nationwide.