Purchased Apgujeong Apartment with 1 Billion Won Savings at 4 Months Old? [2020 National Audit]

Democratic Party Rep. So Byung-hoon Analyzes Housing Fund Procurement Plans
14 Minors Who Purchased High-Value Homes in Seoul Since 2018

Bank Loans for Borrowing '0'
Mostly Funded by Gifts, Inheritance, and Deposits

[Asia Economy Reporter Lee Chun-hee] It has been revealed that a significant portion of the funds for housing purchases by 'gold spoon' minors is prepared through inheritance, gifts, or loans from direct ascendants or descendants. Due to the nature of minors, who find it difficult to obtain financial loans, there was no funding through bank loans at all. There was even a case where a 4-month-old baby bought an apartment in Apgujeong with a deposit of 1 billion KRW.

According to an analysis by Assemblyman So Byung-hoon of the Democratic Party, a member of the National Assembly Land, Infrastructure and Transport Committee, of about 600,000 detailed housing fund procurement plans submitted by the Ministry of Land, Infrastructure and Transport, 14 minors purchased high-priced homes worth 900 million KRW or more in Seoul from 2018 until last August. Notably, five of them prepared all or a significant portion of the funds for the housing purchase through inheritance, gifts, or loans from direct ascendants or descendants.

Among the 14, the youngest, A, born in 2018, jointly purchased a 106.22㎡ unit in Hanyang 7th Complex, Apgujeong-dong, Gangnam-gu, with his mother for 2.49 billion KRW, each owning half, just four months after birth. Of A’s purchase funds amounting to 1.245 billion KRW, 970 million KRW (77.9%) was from his own bank deposits, and the remaining 275 million KRW was a deposit.

Assemblyman So said, "It is both amusing and sad that a baby bought an apartment in Apgujeong-dong, Gangnam-gu, immediately after birth, and also paid 78% of the purchase price with his own savings," adding, "This is a representative case of wealthy Gangnam families using real estate to pass on wealth as soon as a child is born."

B, a teenager born in 2003 who purchased a 1.06 billion KRW stake in the entry rights of 'Raemian Forest' in Gaepo-dong, Gangnam-gu, Seoul, last September, prepared the entire amount through gifts from direct ascendants or descendants. If the amount were gifted at once, the gift tax would amount to 248.32 million KRW for parents and 322.81 million KRW for grandparents.

Additionally, C, born in 2001, who purchased a 53.14㎡ unit in Donga Apartment, Seongsu-dong 1-ga, Seongdong-gu, for 1 billion KRW last August, procured 818 million KRW through gifts and 72 million KRW through loans from direct ascendants or descendants. Assemblyman So stated, "According to C’s submitted fund procurement plan, besides the 890 million KRW obtained through gifts or loans, C also held about 63 million KRW in cash and other assets," and added, "Since this is not a deposit in a financial institution, the National Tax Service and the Ministry of Land, Infrastructure and Transport should investigate how C had 63 million KRW in cash and other funds."

Assemblyman So Byung-hoon of the Democratic Party of Korea. / Photo by Yoon Dong-joo doso7@

Meanwhile, among those who purchased high-priced homes worth 900 million KRW or more in the metropolitan area since 2018, the top five who bought the most expensive homes mainly used bank deposits and jeonse deposits to purchase their homes. Assemblyman So pointed out, "It has been revealed that the multi-billion won deposits paid by tenants are a very useful means to reduce the burden of self-funding for minors who find it difficult to get loans from financial institutions." In fact, none of the 14 cases involved funding through bank loans.

D, born in 2004, who purchased an apartment in Jamsil-dong, Songpa-gu, 'Jamsil Els' for 1.72 billion KRW in 2018, combined 880 million KRW in deposits and 840 million KRW in tenant deposits to buy the house. E, born in 2003, who bought 'Hyundai Villart' in Dogok-dong, Gangnam-gu, for 1.69 billion KRW in 2019, also purchased the house with 1.19 billion KRW in deposits and 500 million KRW in deposits.

There was even a teenager who bought a house in Seoul with only 100 million KRW of their own funds. F, born in 2001, who purchased 'World Villa' in Bukahyeon-dong, Seodaemun-gu, for 1 billion KRW this year, bought the house by combining 100 million KRW in deposits, 600 million KRW in loans from direct ascendants or descendants, and 300 million KRW in tenant jeonse deposits.

Assemblyman So Byung-hoon said, "Through the analysis of 600,000 housing fund procurement plans submitted by the Ministry of Land, Infrastructure and Transport, we were able to confirm how wealth inheritance is taking place in Korean society," and added, "The Ministry of Land, Infrastructure and Transport and the National Tax Service must thoroughly investigate whether minor homebuyers received gifts through illegal or irregular means to purchase homes, and if tax evasion is found, the evaded tax amount must be accurately recovered."