Yang Moon-seok Obtains 1.1 Billion Loan Under College Student Daughter's Name to Purchase Seocho Apartment

Minju Yang Mun-seok Takes Out 1.1 Billion Loan Under 20s Daughter's Name to Buy Apartment
Minju Gong Young-woon Gifts Land to Son Just Before Redevelopment Regulation Enforcement

With the 22nd general election just 10 days away, criticism over inadequate verification is growing as real estate issues involving opposition candidates are repeatedly raised. Gong Yeong-woon, the Democratic Party candidate for Hwaseong, Gyeonggi Province, is embroiled in allegations of 'cunning gifting' of redevelopment area real estate worth billions to his child in their 20s, while Yang Moon-seok, another candidate from the same party in Ansan Gap, Gyeonggi Province, is under suspicion of having taken an 'all-in loan' under his child's name, which is suspected to be illegal.

(From left) Yang Moon-seok, Democratic Party of Korea candidate for Gyeonggi Ansan Gap; Gong Young-woon, Democratic Party of Korea candidate for Gyeonggi Hwaseong.
[Photo by Yonhap News]

According to the property declaration submitted by Yang for the April 10 general election, posted on the Central Election Commission website on the 28th, Yang jointly owns an apartment measuring 137.10㎡ in Jamwon-dong, Seocho-gu, Seoul, with a 25% share held by himself and 75% by his spouse. A search of the Supreme Court's registry for the apartment shows that Yang purchased it jointly with his spouse on August 6, 2020, at a price of 3.12 billion KRW.

However, eight months after purchasing the apartment, on April 7, 2021, Daegu Suseong Saemaeul Geumgo established a mortgage with a maximum claim amount of 1.32 billion KRW on the property. The debtor listed was Yang's eldest daughter, who was a university student in her 20s at the time. Yang and his spouse were listed as co-guarantors. The maximum claim amount is typically set at about 120% of the loan amount from financial institutions, which suggests that Yang's daughter’s loan was approximately 1.1 billion KRW. In the candidate registration property declaration for this election, Yang also reported his daughter’s loan of 1.1 billion KRW and a deposit of 1.5 million KRW. Since there is no tax payment history, it appears she has not been economically active.

Under the Moon Jae-in administration’s December 16, 2019 real estate measures, mortgage loans were completely banned when purchasing apartments worth over 1.5 billion KRW in regulated areas such as speculative or overheated speculation zones. Therefore, it is presumed that the loan Yang’s daughter received was not a mortgage loan. Since mortgage loans are difficult without income, it is highly likely that a loophole was used, such as registering a business under the daughter’s name to obtain a personal business loan.

The ruling People Power Party immediately launched an offensive, calling the loan a "cunning loan" and "loophole loan" upon learning of this fact. Shin Ju-ho, spokesperson for the Central Election Countermeasures Committee, commented, "Democratic Party candidate Yang Moon-seok, who made disparaging remarks toward former President Roh Moo-hyun, remarks resembling those of Lee Jae-myung, and derogatory comments toward local residents, is reported to have purchased a house using a loophole loan for his child." He added, "Yang’s eldest daughter appears to have had no economic activity as she has no record of paying income tax, property tax, or comprehensive real estate tax in recent years. It is remarkable that a university student in her 20s with no economic activity received a massive loan of 1.1 billion KRW."

In response, Yang admitted, "At the time, there was a frenzy of all-in borrowing, so I acknowledge that there was a possibility of loopholes in the loan," but explained, "Our family had been moving between rental houses in Bangbae and Banpo areas, and we decided to buy a house instead. While looking into loans, we connected with Saemaeul Geumgo through real estate."

‘Real Estate Risk’ Hindering the Democratic Party... ‘Gifting’ Just Before Redevelopment Regulations Took Effect

(From the left) Lee Jae-myung, leader of the Democratic Party of Korea, and Gong Yeong-un, Democratic Party of Korea candidate for Hwaseong, Gyeonggi.
[Photo by Yonhap News]

Yang is not the only candidate facing real estate controversies. Gong Yeong-woon, a Democratic Party recruit candidate for Hwaseong, Gyeonggi Province, gifted land and buildings in the Seongsu-dong redevelopment area of Seoul to his son, who was serving as an Air Force sergeant and was 22 years old at the time, one day before the area was designated as a land transaction permission zone in April 2021. The property was originally purchased by Gong in 2017?a multi-family house of 115㎡ (35 pyeong) for 1.18 billion KRW?and gifted in 2021. It is currently valued at around 3 billion KRW.

Once designated as a land transaction permission zone, transactions such as sales or gifts are only allowed if residency requirements are met. However, Gong completed the gift to his son just before the regulation took effect. Since Gong paid the gift tax on behalf of his son, who has no income, suspicions have arisen that inside information was used for real estate investment.

There were also suspicions regarding the timing of the purchase. Gong bought the land and buildings in Seongsu-dong in June 2017 while serving as a vice president at Hyundai Motor Company. Four months later, Hyundai Steel, a Hyundai affiliate, announced an agreement to relocate the Sampyo Industrial Seongsu plant, which caused land prices in the Seongsu-dong area to rise significantly.

Regarding this, Gong posted on his social media, "At the time, I was not aware of the designation of the land transaction permission zone. I accept that gifting a house to a child serving in the military does not meet the public’s expectations," but expressed his frustration, saying, "The relocation of the Sampyo Ready-Mixed Concrete site has been discussed for years. This is just a malicious, forced interpretation."