Government's Showy Pressure on Multi-Home Public Officials... "What Crime Did Civil Servants Commit?"

Public Sector Scandal Spreads

Following Prime Minister Jeong Sye-kyun's Recommendation to Sell, 'Personnel Disadvantages' Also Under Consideration

"Understanding the Aspect of Leading by Example, but Everyone Has Their Own Circumstances..."

Uncooperative Civil Servants Who Became Multi-Homeowners Due to Sejong Pre-sale Rights with Resale Restrictions

Expecting Exceptions but Potential for Controversy Over Special Public Official Supply

[Asia Economy Reporters Joo Sang-don (Sejong) & Jang Se-hee] As the Prime Minister's Office pushes for 'personnel disadvantages' to pressure high-ranking civil servants to dispose of multiple homes, voices of dissatisfaction are growing, especially within the Sejong government circles. Considering multi-home ownership when promoting to Grade 2 senior officials effectively makes Grade 4 and 5 officials, who are about to be promoted, potential targets, causing unrest in the public service community. In particular, among Grade 2 and above officials who are immediately included in the multi-homeowner crackdown due to Sejong pre-sale rights that cannot be sold because of resale restrictions, complaints such as "What crime have we committed?" are erupting. Some are even mentioning the possibility of unconstitutionality.

◆ "Ordering unconditional sale without asking about the process of wealth formation is unfair" = On the 9th, a director-level official from a central government ministry said, "I somewhat agree with the Prime Minister's recommendation of owning one house from the perspective of public officials leading by example, but it is too sudden," adding, "There are pre-sale rights that cannot be sold, and some people have inevitably become two-homeowners due to personal circumstances such as caring for parents or children, so it is frustrating to be treated as if they committed a serious wrongdoing."

Recently, as multi-homeowners have been identified as the culprits behind the rapid rise in housing prices and criticism against them continues, the ruling party, the Blue House, and even the Prime Minister have issued directives that "high-ranking multi-homeholding public officials should quickly dispose of their houses." Based on central government ministries, there are about 150 high-ranking officials at Grade 1 or above, including vice ministers and bureau chiefs, and expanding to Grade 2 or above, including director-level officials, the number immediately reaches about 2,150 people who are subject to 'leading by example.'

There are also concerns that the government's plan to impose disadvantages on multi-homeholding civil servants during promotion could be unconstitutional. Professor Park Ji-soon of Korea University Law School said, "It seems to be approached very politically, which is worrisome," adding, "If the issue is about how the property was formed, that might be understandable, but giving disadvantages in promotion simply because someone owns two or more homes lacks grounds and could be judged unfair."

Especially strong dissatisfaction comes from high-ranking officials holding Sejong apartment pre-sale rights. Sejong is designated as a speculative overheating zone, speculative area, and subscription overheating area, so resale is prohibited until ownership registration. Even if they want to dispose of the property, they cannot sell it until move-in. The case of Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki is representative. Hong is a two-homeowner with an apartment in Uiwang, Gyeonggi Province, and a Sejong apartment pre-sale right. Last December, Hong stated he would dispose of the Sejong pre-sale right, but the resale restriction until move-in has delayed the disposal timing.

◆ Sejong Government Circles: "What are we supposed to do with pre-sale rights..." = While pre-sale rights cannot be sold, they can be relinquished. However, this is practically difficult. A construction company official explained, "Relinquishing pre-sale rights is possible only if recognized by the construction company or developer," adding, "From the construction company's perspective, if pre-sale rights are relinquished, they need to recruit other buyers, which requires additional time and costs, and if there is a large-scale relinquishment, it could cause difficulties in securing construction payments, so they rarely allow it." Even if relinquishment is possible, financial losses must be accepted. If interim payments were made through loans, interest on those loans and the contract deposit, usually 10% of the sale price, are not refunded at all. Thus, relinquishing pre-sale rights is not easy and entails losses of tens of millions of won.

Ultimately, high-ranking officials' attention is focused on the disposal deadline and the scope of exceptions for multi-homeowners. The Prime Minister's Office plans to send official letters with detailed guidelines to each ministry soon. If officials owning pre-sale rights with resale restrictions are not recognized as unavoidable multi-homeowners, they will have to sell other houses they can dispose of besides the Sejong pre-sale rights to become single-homeowners. A government official lamented, "In the early days of the Sejong relocation, there was undersubscription in applications, so the government actively encouraged civil servants to apply, but now only those who belatedly purchased are suffering."

If pre-sale rights are recognized as an exception, it could lead to controversy over the special public official supply system itself. The special supply system was introduced in the early 1990s during the supply of apartments in first-generation new towns like Bundang and Ilsan. The purpose was to help groups needing policy consideration and the homeless more easily secure their own homes. Later, in 2010, the 'Special Supply for Relocated Institution Workers (Public Official Special Supply)' was introduced for civil servants and public institution workers relocating to Sejong and innovation cities. Its purpose is to assist in securing new housing in the work relocation area, but cases of selling apartments without even a day of actual residence to make speculative profits have repeatedly emerged, leading to ongoing calls to reduce or abolish the allocated supply.