3-Year-Old Child Purchases Land... Government Launches Planned Investigation into Illegal Foreign Transactions

920 Cases of Suspicious Speculation Including Up-Down Contracts, Nominee Trusts, and Evasive Gifts Under Planned Investigation

[Asia Economy Reporter Kim Min-young] The government will intensively crack down on illegal land transactions by foreigners. The government plans to expand the scope of investigations to include not only land but also non-residential transactions such as officetels by foreigners.

The Ministry of Land, Infrastructure and Transport announced on the 9th that starting from the 10th, it will begin a planned investigation into speculative and illegal transaction activities in the process of foreign land transactions in cooperation with related agencies including the Ministry of Justice, National Tax Service, Korea Customs Service, Ministry of Agriculture, Food and Rural Affairs, and Korea Real Estate Board.

This investigation will focus on 920 cases suspected of speculative transactions such as up/down contracts, name trusts, and disguised gifts among 14,938 foreign land transactions nationwide from 2017 to the end of last year. According to the Ministry of Land, Infrastructure and Transport, the volume of foreign land transactions has exceeded 2,000 cases annually over the past six years from 2017 to 2022. Among these, abnormal signs such as large-scale land accumulation by foreigners (up to 92 parcels purchased by one individual), purchases by minors (youngest age 3), and transactions by nationals of tax havens (a total of 101 parcels) have continuously been detected.

In particular, since farmland transactions account for the largest portion with 490 cases among the suspicious speculative transactions, the ministry plans to conduct a focused investigation on violations of the Farmland Act in cooperation with the Ministry of Agriculture, Food and Rural Affairs.

The Ministry of Land, Infrastructure and Transport will notify related agencies such as the National Tax Service, Financial Services Commission, and local governments of any illegal activities detected, so that measures such as tax evasion and loan analysis and imposition of fines can be taken. For violations of the Farmland Act, farmland disposal obligations will be imposed. Additionally, following last year's investigations into foreign housing and foreign land transactions, the scope of investigations will be expanded to include non-residential transactions such as officetels by foreigners.

Legal amendments for investigating foreign real estate transactions will also be pursued. The Ministry of Land, Infrastructure and Transport plans to revise the Enforcement Decree of the Real Estate Transaction Reporting Act to include provisions such as designating a 'trustee manager' domestically to report transactions. Previously, it was difficult to conduct investigations when buyers left the country after purchasing real estate or when their addresses were unclear, making it hard to obtain explanatory materials; this revision aims to improve that.

Nam Young-woo, Director of Land Policy at the Ministry of Land, Infrastructure and Transport, stated, "Through planned investigations, we will thoroughly crack down to establish a transparent and fair market order and protect genuine demanders."