Joint Briefing by Relevant Ministries Including the Office for Government Policy Coordination
"Zero Tolerance Response to Real Estate Crimes" Announced
Supervisory Body to Have Up to 100 Personnel
Enhanced Response with Dedicated Investigativ
The government will launch an inter-ministerial "Real Estate Supervision Task Force" under the Prime Minister's Office on November 3 to eradicate illegal activities in the real estate sector and establish order in the market. This real estate supervisory body, which will serve as a control tower for responding to illegal real estate activities, will be strengthened with its own investigative function and will be composed of up to about 100 members. It is scheduled to be established early next year.
The government recently investigated suspected illegal real estate transactions, uncovering 2,696 cases and referring 35 of them for criminal investigation. Going forward, the scope of investigations into abnormal transactions will be expanded to include the entire Seoul metropolitan area, and a focused reporting period will be operated until the end of the year. Financial authorities have decided to tighten lending regulations on borrowers who have taken out inappropriate business loans related to real estate.
Kim Yongsoo, Deputy Minister of the Office for Government Policy Coordination, is speaking at a joint briefing of related government ministries on responding to illegal real estate activities at the Government Complex Seoul on the 30th. Photo by Yonhap News
The Office for Government Policy Coordination, the Ministry of Land, Infrastructure and Transport, the Financial Services Commission, the National Tax Service, and the National Police Agency held a joint briefing at the Government Complex Seoul on the 30th, announcing the launch and establishment plan for a government-wide supervisory body to address illegal real estate activities, as previously previewed in the October 15 real estate policy announcement. They also explained the progress and future plans for investigating and prosecuting illegal real estate activities.
Launch of the Real Estate Supervision Task Force: "Zero Tolerance Policy"
The government has previously stated its intention to establish a supervisory body under the Prime Minister's Office to respond to illegal transactions and price manipulation in the real estate market. Until the official launch of this body, the Real Estate Supervision Task Force, which brings together the capabilities of relevant ministries, will be introduced on November 3.
The task force will be a permanent organization composed of the Office for Government Policy Coordination, the Ministry of Land, Infrastructure and Transport, the Ministry of the Interior and Safety, the Financial Services Commission, the National Tax Service, and the National Police Agency. It will strengthen cooperation and coordination in investigating and prosecuting illegal real estate activities, enabling a more systematic and swift response. The task force will also be responsible for preparing the rapid launch of the supervisory body.
Kim Yongsoo, Deputy Minister of the Office for Government Policy Coordination, stated, "We will respond with zero tolerance to real estate crimes that threaten the lives of ordinary citizens and young people, with the task force at the center of our efforts," adding, "We plan to further strengthen our capabilities to ensure the complete eradication of illegal real estate activities."
The real estate supervisory body will be established early next year. It will have its own investigative personnel to conduct direct investigations and will enhance the efficiency of responses to illegal activities through planning and coordination with relevant agencies. Given that it will also have investigative functions, Deputy Minister Kim explained that the organization could range from several dozen to about 100 members in size.
Investigation of Illegal Transactions Expands to the Seoul Metropolitan Area: "Year-End Intensive Reporting Period"
The Ministry of Land, Infrastructure and Transport is investigating abnormal housing transactions and rental fraud in Seoul and is notifying relevant agencies of suspicious transactions. To date, 2,696 suspicious transactions have been reported to agencies such as the National Tax Service and the Financial Services Commission, with 35 cases referred to the National Police Agency for investigation.
Going forward, the scope of investigations will be expanded to the entire Seoul metropolitan area. As a follow-up to the October 15 measures, planned investigations will be conducted for all of Seoul, 12 areas in Gyeonggi Province, and areas of concern for the "balloon effect" (such as Hwaseong Dongtan and Guri). Joint on-site inspections will also be conducted to focus on violations of actual residence requirements for land transaction permits and illicit funding sources, such as disguised gifts.
The government is also accelerating investigations into price manipulation. Of the contract cancellations for Seoul apartments reported between April 2023 and August this year, 425 cases have been selected for investigation. In particular, cases canceled this year have been prioritized, and eight suspicious cases have already been referred for investigation. As for abnormal real estate transactions by foreigners, 605 cases are currently under investigation. Among these, investigations into housing transactions will be completed this month, while investigations into non-residential and land transactions will be finished by the end of the year.
Kim Kyucheol, Director of the Housing and Land Office at the Ministry of Land, Infrastructure and Transport, said, "We will operate an intensive reporting period for market manipulation activities until the end of the year to actively respond to illegal real estate activities," adding, "We will continue to strengthen the effectiveness of market supervision functions, including the appointment of special judicial police officers for real estate and the initiation of investigations."
Kim Kyucheol, Director of the Housing and Land Office at the Ministry of Land, Infrastructure and Transport, is speaking at the joint briefing of related government departments on responding to illegal real estate activities held at the Government Seoul Office Building on the 30th. Photo by Yonhap News
Financial Authorities to Inspect Misuse of Business Loans for Housing Purchases
The Financial Services Commission and the Financial Supervisory Service are inspecting whether business loans have been misused for purposes other than their intended use, such as purchasing housing. Among loans issued by banks between January and July (5,805 cases), 45 cases of misuse were detected. Of these, the repayment of 25 loans has already been completed, with the remainder to be resolved by the end of the year. On-site inspections of secondary financial institutions will be completed next month.
Regulations will be tightened for borrowers who misuse business loans for purposes such as purchasing housing. Going forward, information on contract violations for business loans will be registered with the Korea Credit Information Services, just as with household loans, so that all financial institutions can use this information in their credit assessments. The government is also actively considering regulations to restrict new business loans for borrowers who have violated terms at all financial institutions in the future.
The National Tax Service is responding firmly by conducting tax audits whenever suspicions of illicit gifting or tax evasion in real estate are confirmed through market monitoring. Going forward, the verification of funding sources for high-priced apartment transactions will be significantly strengthened, and all gift transactions will be thoroughly examined until the market stabilizes. The Ministry of Land, Infrastructure and Transport will cooperate by sharing funding plans in real time, and a separate "Real Estate Tax Evasion Reporting Center" will also be established.
The National Police Agency is conducting a special crackdown. To date, it has investigated and prosecuted 146 cases involving 268 individuals in connection with eight major types of illegal real estate activities, resulting in the referral of 64 individuals for prosecution. Investigations into suspected price manipulation referred by the Ministry of Land, Infrastructure and Transport are being handled by a dedicated investigation team at the Seoul Metropolitan Police Agency. In the future, the government plans to conduct customized crackdowns, focusing on housing in major cities such as Seoul and the metropolitan area, and on land in other small and medium-sized cities.
"No Adjustment to Lending Regulations": Government Draws a Line
The government explained that any review of the adjustment of officially assessed property values will be conducted separately in the future. Director Kim stated, "The official property value realization rate has been maintained at about 69% as planned until last year," adding, "This year, it will also be maintained at that level, and a separate review will be conducted on how to gradually adjust the realization plan going forward."
Although there have been criticisms that the lending regulations included in the October 15 policy are too stringent, the government has made it clear that there is no possibility of change. Shin Jinchang, Secretary General of the Financial Services Commission, explained, "We are constantly monitoring whether there are any inconveniences for genuine homebuyers," but added, "At present, we are not considering any further adjustments to lending regulations."
Regarding concerns that genuine homebuyers may face difficulties due to the October 15 policy, the government's position is that "there are no measures that prevent genuine homebuyers from purchasing homes." Director Kim stated, "The ability of ordinary citizens to secure funds through loans has not been significantly expanded beyond the basic regulations, and for first-time buyers, the loan-to-value (LTV) ratio remains at 70%. In addition, support for young people and newlyweds through government funds and policy finance remains in place."
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