[3rd New Housing Site] Speculation Prevention Measures...Heavier Penalties for Unfair Gains, Forfeiture of Profits Possible

Designation of Restricted Transaction Areas in Surrounding Regions
Comprehensive Survey Conducted for 7 Months Prior to Announcement

Location Map of New Public Housing Sites in the Seoul Metropolitan Area / Provided by the Ministry of Land, Infrastructure and Transport.

[Asia Economy Reporter Kangwook Cho] The nearly seven-month delay in finalizing the locations for new public housing sites, a key part of the February 4 supply plan, is due to concerns over speculation within the candidate sites.

As a result, when announcing the third round of new public housing sites on the 30th, the government introduced strong anti-speculation measures such as enhanced penalties proportional to the amount of illicit gains and confiscation of profits. Additionally, areas within the new public housing districts and surrounding neighborhoods will be designated as land transaction permission zones to block speculative land transactions. From the moment the new public housing sites are publicly announced for resident review, development activities such as building construction, installation of structures, land alteration, soil and stone extraction, land division or consolidation, and planting will be restricted within the project zones. Furthermore, the government plans to activate the ‘Tupachi’ (resident reporting and reward system) for community participation in speculation crackdowns and install CCTV within the project areas to monitor speculative activities. Continuous day and night patrols will also be conducted in areas suspected of speculation.

The government stated that prior to announcing the locations, investigations were conducted to verify speculation suspicions based on unusual transaction trends within the candidate sites, including surveys of land ownership by public officials, real transaction investigations, and police investigations. According to the Ministry of Land, Infrastructure and Transport (MOLIT), a full survey was conducted involving 4,500 MOLIT employees, 9,800 Korea Land and Housing Corporation (LH) employees, 790 Gyeonggi Urban Innovation Corporation employees, and 450 Incheon Urban Corporation employees.

The MOLIT revealed that the investigation found two MOLIT employees owning land within the new housing sites. One acquired the land through inheritance in 1989, and the other purchased a single parcel (605㎡) near their current residence in 2018 and is currently farming it themselves. Additionally, one LH employee acquired land within the new housing sites in 2013; although no suspicion of speculation was confirmed, further verification will be conducted.

Moreover, since May, the MOLIT explained that a real transaction investigation (from January 2018 to June 2021) of the new public housing candidate sites and nearby areas identified 229 suspicious cases out of 1,046 cases targeted for intensive investigation. By type, there were 5 suspected cases of name-trust fraud, 30 suspected cases of disguised gifting, 4 suspected cases of misuse of loans for purposes other than intended, and 201 cases of false reporting of contract dates or prices. The government plans to notify the National Police Agency, National Tax Service, Financial Services Commission, and local governments about the 229 suspicious cases to take actions such as criminal investigations, tax evasion analysis, and fines. Investigations will also continue on 311 transactions that occurred just before the announcement (July to August 2021) and those currently undergoing explanation procedures by the parties involved.

Among 11,000 parcels within the new housing sites, 66 cases were suspected of violating notification laws. Of these, 49 cases were confirmed to be either beyond the statute of limitations or not in violation of the Farmland Act, while the remaining 17 cases are under police investigation. The police will investigate illegal activities such as the use of undisclosed internal information.

Earlier, under the ‘Real Estate Speculation Eradication and Recurrence Prevention Measures’ announced on March 29, the government decided to impose enhanced penalties proportional to illicit gains and confiscate profits for illegal acts involving the use of undisclosed internal information by related officials and third parties who received such information. To continuously prevent and manage illegal acts such as the use of undisclosed information, regular and ad hoc inspections will be conducted targeting related officials. Furthermore, strengthening requirements for relocation housing sites and tightening criteria for negotiated transferor housing sites (such as priority allocation) will be completed through related legal amendments within the year and applied to new public housing sites.