Investigation of 1,086 Suspicious Illegal Transactions
Numerous Circular Transactions Involving Family Members and Employees
A large number of false transaction reports involving so-called 'house price boosting,' where contracts are made at falsely high prices to raise actual transaction prices and then canceled, have been uncovered.
The Ministry of Land, Infrastructure and Transport announced on the 10th that it investigated 1,086 suspicious transactions nationwide among apartment sales from January 2021 to February 2023, and detected a total of 541 suspected violations of laws, including 32 suspected cases of self-dealing and false reporting.
Among these, 164 cases suspected of violating the Real Estate Transaction Reporting Act were reported to local governments, 14 cases suspected of violating the Licensed Real Estate Agents Act were reported to the National Police Agency, and 429 cases suspected of income tax evasion were reported to the National Tax Service.
Market manipulation aimed at boosting house prices accounted for about 80% of the detected cases during the period of rapid apartment price increases from January 2021 to January 2022.
A representative case involved boosting actual transaction prices using corporations. For example, a corporation in Busan sold a pre-sale property to an employee at a record price (340 million KRW) in December 2021, then canceled the contract in September of the following year. In the meantime, before reporting the contract cancellation, the corporation sold multiple corporate-owned houses at the inflated price. The Ministry of Land, Infrastructure and Transport suspected this was a false sales contract report (self-dealing) and notified the local government.
Cases suspected of collusion between sellers and brokers to boost house prices were also uncovered. Sellers influenced the rise in actual transaction prices by repeatedly reporting cancellations, including at record prices, and then sold to third parties at the canceled transaction price level. This occurred in four apartment complexes in provincial areas, with a total of 44 purchases and 41 sales. Additionally, a specific broker repeatedly participated in transactions suspected of being aimed at boosting house prices, suggesting collusion with brokers. This case was reported to the National Police Agency.
Furthermore, the Ministry notified local governments of 317 cases where ownership transfer registration was not applied for within 60 days after the balance payment date, and took measures such as fines for violations.
Among notifications for fines due to unregistered transactions, Gyeonggi Province had the highest number with 84 cases (26.5%), followed by Busan (12%), Daejeon (5.0%), and Seoul (4.4%).
Not only false transaction reports but also cases where contract cancellations were not reported or where transactions were normal but registration applications were not submitted are subject to fines.
Meanwhile, starting October 19, penalties under the Real Estate Transaction Reporting Act will be strengthened to impose imprisonment of up to three years or fines of up to 30 million KRW for false transaction reports made with the intent of obtaining financial gain. The Ministry of Land, Infrastructure and Transport is currently conducting a research project on 'Advanced AI-based abnormal real estate transaction detection methods,' and based on the research results, plans to analyze transaction networks and directly investigate suspected habitual violations in unregistered transactions, referring cases of false reporting to the National Police Agency for investigation.
Won Hee-ryong, Minister of Land, Infrastructure and Transport, stated, “We will establish a system to continuously monitor abnormal transactions through scientific analysis methods and thoroughly crack down on illegal real estate transactions to prevent them from taking root.”
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