Ministry of Land and Real Estate Supervision Task Force Investigate Abnormal Real Estate Transactions by Foreigners
The government announced on the 30th that, following a special investigation into abnormal real estate transactions by foreigners over the past four months, it has uncovered 88 cases of suspected illegal transactions (126 suspicious acts).
Previously, in an investigation focused on residential properties last month, 210 suspected illegal transactions were found. This time, the investigation targeted non-residential properties such as officetels and land. The special investigation reviewed 167 reported transactions from July last year to July this year, focusing on cases where illegal activity was detected. Transactions involving residential properties, totaling 36 cases, were also included.
There were cases where more than 10,000 dollars in cash was brought into Korea from abroad without declaration, or funds were transferred illegally through so-called "hwanchigi" (illegal foreign exchange transactions) without going through authorized foreign exchange banks. For example, a foreigner who signed a contract for a Seoul officetel at 395 million won claimed to have raised 365 million won through overseas remittance or by bringing in cash, but there was no record of a foreign currency import declaration.
Another foreigner was caught after purchasing a Seoul officetel and signing a lease contract with a deposit of 120 million won and monthly rent. Foreigners entering Korea on a short-term stay of less than 90 days are not allowed to engage in rental business to earn rental income. There was also a case where a foreigner borrowed 3.8 billion won from a company where he serves as an internal director to purchase a 4.9 billion won apartment in Seoul. In such cases, the borrower must provide evidence such as a loan agreement and proof of proper interest payments, but the investigation found that the transaction did not follow proper accounting procedures.
Other cases detected in the investigation include: violating loan regulations by taking out a loan for living expenses using an existing apartment as collateral and then purchasing a single-family home in Gyeonggi Province; falsely reporting the transaction price when purchasing a Gyeonggi Province officetel from a corporation for 387 million won and receiving 31 million won as an acquisition tax subsidy; and a case where a foreigner had a relative receive an apartment allocation on their behalf, paid the deposit directly to the construction company, and then engaged in a direct transaction of the allocation right after the resale restriction period ended.
The Ministry of Land, Infrastructure and Transport and the Real Estate Supervision Task Force under the Office for Government Policy Coordination have notified relevant agencies, including the Ministry of Justice, the Financial Services Commission, the National Tax Service, the Korea Customs Service, and local governments, about these suspected illegal activities. They plan to pursue follow-up measures such as police investigations and the collection of unpaid taxes. As four months have passed since the designation of foreign land transaction permit zones in August, the Ministry of Land, Infrastructure and Transport will conduct a special investigation to verify actual residence. In these zones, foreigners who purchase a house must move in within four months.
Kim Gyucheol, Director-General for Housing and Land Policy at the Ministry of Land, Infrastructure and Transport, stated, "We will respond strictly to illegal activities in real estate transactions by foreigners, regardless of whether they involve residential, non-residential, or land properties. By cooperating with relevant agencies, we plan to strengthen oversight and supervision of all foreign real estate transactions to establish order in the market."
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