Serious Issue of 'Dark Disclosure' Hiding the Basis for Apartment Sale Price Calculation

Board of Audit and Inspection Announces Audit Results on Apartment Sale Price Calculation... "97.9% of Private Sales Not Properly Disclosed"

[Asia Economy Reporter Ryu Jeong-min] It has been revealed that the issue of 'blind disclosure,' such as failing to properly inform the basis for calculating the sale price of apartments subject to the price ceiling system, is serious. In particular, 97.9% of private sale apartments were found not to properly disclose additional costs.

On the 9th, the Board of Audit and Inspection announced an audit report on the 'Request for Audit on Apartment Sale Prices.' This is the result of an audit on a public interest audit request stating that 'Gwacheon City improperly handled related tasks such as overestimating the sale price of the ○○ Block.'

According to Article 57 of the Housing Act, when disclosing the sale price of housing subject to the price ceiling system, the review contents of the Sale Price Deliberation Committee and the calculation basis for additional costs added to the land cost and construction cost must be included (disclosure of additional costs).

Gwacheon City, regarding the ○○ Block project, decided the sale price (ceiling amount) at 411 billion KRW, including 8 additional land cost items (34.8 billion KRW) and 12 additional construction cost items (37.2 billion KRW), after deliberation by the Sale Price Deliberation Committee in June 2020.

The Board of Audit and Inspection stated, "Although Gwacheon City did not include any disclosure related to additional costs in the sale price announcement of the resident recruitment notice, it approved the resident recruitment in July 2020 without instructing disclosure or reviewing the appropriateness of the disclosure."

In particular, the Board of Audit and Inspection pointed out, "Upon checking the disclosure status of additional costs for 192 private sale projects recruiting residents from January 2019 to April 2021 (including Gwacheon City ○○ Block), 143 projects (74.5%) did not disclose additional costs," and added, "In fact, 188 out of 192 projects (97.9%) did not properly disclose additional costs, as specific itemized amounts and calculation bases were unknown."

For housing subject to the price ceiling system, the structure is such that construction companies calculate the sum of land cost, construction cost, and additional costs, and local governments deliberate and decide the price. Additional costs cover expenses for structural reinforcement, performance improvement, and housing premiumization. The Board of Audit and Inspection judged that there are loopholes in the current additional cost disclosure system.

The Board of Audit and Inspection pointed out, "The Rules on the Calculation of Apartment Sale Prices do not reflect the provisions of the Housing Act requiring disclosure of additional cost review contents, and although separate forms are needed, the Ministry of Land, Infrastructure and Transport has not established separate forms in the guidelines related to sale price disclosure."

The Board of Audit and Inspection explained, "Even if additional cost disclosure is omitted or not properly disclosed in the resident recruitment announcement, the Sale Price Deliberation Committee does not review this."

The Board of Audit and Inspection notified the Minister of Land, Infrastructure and Transport to prepare forms that can disclose the review contents and calculation basis of additional costs. It also notified to prepare a plan to amend the enforcement decree. Gwacheon City Mayor was notified to prepare measures to ensure that additional costs for sale price disclosure targets such as the ○○ Block are properly disclosed.