Father Sells Apartment to Daughter for 1.5 Billion Won, Moves into Jeonse with 1.1 Billion Won Deposit

Planned Investigation Launched into Suspicious Apartment Transactions in Seoul
Ministry of Land, Infrastructure and Transport to Report Violations and Request Police Investigations

The Ministry of Land, Infrastructure and Transport announced on the 2nd that it identified 204 suspicious cases of abnormal transactions, including illicit gifting, among apartment sales in Seoul from January to February this year. After analyzing the parties' explanatory materials to determine whether illegal activities occurred, the ministry plans to report violations to relevant agencies such as the National Tax Service, Financial Services Commission, Ministry of the Interior and Safety, and local governments, and request police investigations.

The Ministry and Seoul Metropolitan Government have been examining abnormal apartment transactions in major Seoul areas since the 10th of last month. They are conducting joint on-site inspections and detailed planned investigations into the sources of funds. Authorities noted signs of overheating, such as increased transactions centered around the Gangnam area before and after the designation and lifting of land transaction permission zones by Seoul at the end of last month.

View of Yeouido apartments from the 63 Building observatory. Photo by Hyunmin Kim kimhyun81@

The on-site inspection team is jointly composed of the Ministry of Land, Infrastructure and Transport, Seoul Metropolitan Government, autonomous districts, and Korea Real Estate Board. The target areas include the three Gangnam districts and other major regions. The team focuses on market-disturbing activities such as price collusion, false listings and reports, and the appropriateness of funding sources in suspicious transactions. As of the end of last month, on-site inspections were conducted at 35 apartment complexes across 11 districts, including the three Gangnam districts, Gangdong, Mapo, Seongdong, and Dongjak. There are plans to expand the inspections further.

The detailed planned investigation targets apartment transaction reports within Seoul. Together with the Korea Real Estate Board, they examine whether the funding sources were appropriate and if any violations occurred. They are conducting comprehensive investigations into suspicious transactions such as those intentionally inflating prices by reporting and then canceling high-price deals, illicit gifting, and suspected illicit loans violating loan regulations.

For the initial 204 cases filtered, explanatory materials have been requested since the 17th of last month. One case under detailed investigation involves selling a Seoul apartment to a daughter and her spouse for 1.5 billion KRW, then signing a new lease with a deposit of 1.1 billion KRW, raising suspicions of excessive deposits among related parties. In Seoul, especially in the Gangnam area, apartments are expensive, and the typical jeonse (key money deposit) rate slightly exceeds 50%.

Cases suspected of excessive deposit among related parties presented by the Ministry of Land, Infrastructure and Transport. Sold an apartment to daughter and son-in-law while signing a high-priced jeonse contract. The Ministry of Land, Infrastructure and Transport reported it to the National Tax Service. Provided by the Ministry of Land, Infrastructure and Transport

Another suspicious case involved purchasing a Seoul apartment for 4.7 billion KRW, reporting 1.7 billion KRW as personal funds and 3 billion KRW as borrowed from the buyer's father. This case is awaiting explanatory materials and may be reported to the National Tax Service depending on the findings. Additionally, there were signs of price collusion detected through apartment community applications that encouraged transactions above certain prices in specific complexes. The local government has been requested to conduct further investigations on suspected price collusion.

The Ministry plans to conduct additional investigations on transactions reported in March and April as a second phase. If overheating continues, the scope and period of investigations will be expanded. Kim Gyu-cheol, Director of the Housing and Land Office at the Ministry, stated, "To stabilize the overheated real estate market, it is essential to thoroughly detect illegal and unfair acts that disrupt market order and investigate the sources of funds to block speculative demand. Through proactive and effective real transaction investigations, we will eradicate illegal transactions and work closely with related ministries and local governments to stabilize the market."