After Gauging Public Opinion, the Ruling Party Shifts Stance on Real Estate Transaction Analysis Agency Act

Non-legislative Amendment Draft
Excluding Investigation Rights, Focusing on Trend Analysis
Opposition to Establishment of Analysis Agency... Ongoing Struggles

[Image source=Yonhap News]

[Asia Economy Reporter Koo Chae-eun] Following the confirmation of public sentiment backlash triggered by real estate issues in the April 7 by-elections, the ruling party has begun to moderate the establishment of the ‘Real Estate Transaction Analysis Institute,’ which has sparked ‘Big Brother’ controversy.

They are scaling down the institution to one that only monitors trends and conducts investigative analysis by removing investigative authority, and the pre-registration requirement for real estate advisory services is also expected to be abolished.

According to the National Assembly Land, Infrastructure and Transport Committee on the 12th, the ruling party and government have decided to abandon the enactment of the ‘Act on Real Estate Transactions and Real Estate Service Industry (Real Estate Transaction Act),’ which was being promoted as a follow-up legislative measure after the Korea Land and Housing Corporation (LH) scandal, and instead will amend the existing law by proposing the ‘Partial Amendment Act on Real Estate Transaction Reporting, etc. (Real Estate Transaction Reporting Act).’

Furthermore, they have settled on removing most of the powers such as investigative authority, which faced strong opposition, and strengthening only the investigative and analytical functions. A Democratic Party official said, “If we proceed with the enactment of a new law, we would have to schedule public hearings, and it would be difficult to reach consensus with the opposition from the start. Moreover, public opinion on real estate policies is not favorable, so we decided to continue legislative discussions step-by-step through amendments.”

Under the alternative ‘Real Estate Transaction Reporting Act,’ market-disturbing activities such as price manipulation, collusion, illegal resale, and illegal subscription will be monitored, but the powers granted at the time of the new law’s introduction?such as investigative authority, taxation authority, and prosecution authority?will be excluded. Additionally, the pre-reporting function to the Ministry of Land, Infrastructure and Transport for paid advisors such as real estate YouTubers, which was included in the new law, is also expected to be removed. This measure was intended to prevent influencers from inducing specific real estate transactions for the purpose of price manipulation, but concerns have been raised even within the ruling party that it could be an excessive regulation.

However, public opinion remains strong that even the amendment approach could still dampen market functions, so difficulties in the future discussion process seem inevitable. Professor Shim Gyo-eon of Konkuk University’s Department of Real Estate said, “It is inappropriate to extend an issue that started with public officials’ pursuit of private interests to the entire market where free transactions should take place,” and pointed out, “The establishment of the Real Estate Transaction Analysis Institute itself could suppress the market’s decision-making process.”

Woo Byung-tak, team leader of the Real Estate Investment Advisory Center at Shinhan Bank, stated, “The principle and justification of preventing unfair market order are desirable,” but expressed concern that “if the Real Estate Transaction Analysis Institute Act is pushed forward rapidly without a deliberation process, side effects such as a contraction of transactions by actual buyers and confusion among market participants may occur.”