Authorities Expand Investigations Beyond All of Seoul and 12 Locations in Gyeonggi Province
512 Suspected Illegal Activities Detected from January to April This Year
The Ministry of Land, Infrastructure and Transport announced on the 26th that it will conduct intensive investigations into illegal real estate activities in areas designated as speculative zones and land transaction permit zones, including all of Seoul and 12 locations in Gyeonggi Province. The ministry will expand targeted investigations and on-site inspections, which have focused on certain areas of Seoul for irregular loans and gifts, to newly regulated areas since September, as well as to non-regulated areas such as Dongtan in Hwaseong and Guri.
The investigation will primarily focus on violations related to land transaction permits and irregular funding sources. In land transaction permit zones, buyers are required to move in within four months of obtaining the permit and to reside in the property for two years after acquisition. Authorities will check for false reporting and conduct on-site inspections to ensure compliance with the residency requirement. Disruptive activities such as using corporate funds to purchase homes or receiving irregular gifts from parents are also major targets of the inspection.
The government is pursuing measures to further categorize the information required in funding plans. Previously, loans from financial institutions were classified as mortgage loans, credit loans, or other loans. Going forward, business loans will be added as a separate category, and the name of the financial institution will also need to be specified.
Financial authorities have decided that if cases of loans granted in violation of regulations are detected, the funds will be recovered and new loans will be prohibited for a certain period. Online investment-linked finance and private lending, which have been cited as alternative loan channels, will also be monitored for potential side effects or circumvention. The scale of new mortgage loans will be reviewed by sector. The National Tax Service will strengthen on-site monitoring by collecting transaction trends and information on tax evasion.
As a result of targeted investigations into transactions reported in March and April, the government uncovered 317 suspected illegal cases (376 acts). Combined with cases from January and February, the number of suspected illegal activities increased to 512. Investigations into unusual transactions from May and June are scheduled to be completed next month. Among the detected cases, one individual in Seoul purchased an apartment for 5.45 billion won, borrowing 3.17 billion won from a corporation in which he is a shareholder to use as transaction funds. The National Tax Service was notified due to excessive related-party loans.
Another case involved an individual purchasing a 4.25 billion won apartment in Seoul and taking out a 2.3 billion won business operating loan from a financial institution; this was reported to the Financial Services Commission. In another incident, a person bought an apartment from their parents for 4 billion won and signed a 2.5 billion won jeonse (long-term deposit lease) contract with the parents remaining as tenants; this was reported to the National Tax Service as a suspected irregular gift. In Gyeonggi Province, there was a case where an apartment was reported as being traded for 580 million won, but an actual transfer of 630 million won between parties raised suspicions of an under-the-table contract.
Kim Gyucheol, Director General for Housing and Land at the Ministry of Land, Infrastructure and Transport, stated, "We plan to thoroughly block illegal activities such as false reporting and irregular transactions to ensure the stability of the real estate market," adding, "If illegal activities are detected, we will respond with zero tolerance in cooperation with relevant agencies."
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