Government to Track Funding Sources of High-Value Real Estate Cash Deals and Private Debt Transactions

The government has announced plans to strengthen the verification of funding sources for high-value real estate cash transactions and acquisitions using private debt, which have been increasing recently amid tightened lending regulations. In addition, the government will conduct a focused investigation into irregular transactions among related parties, such as low-priced transfers, within the first quarter of this year.

The Real Estate Supervision Task Force of the Office for Government Policy Coordination held the "5th Real Estate Illegal Activities Response Council" at the Government Complex Seoul on January 14, sharing plans for intensive investigation and enforcement in the first quarter, including these measures. The meeting was attended by officials from the Ministry of Economy and Finance, Ministry of Justice, Ministry of the Interior and Safety, Ministry of Land, Infrastructure and Transport, Financial Services Commission, National Tax Service, and the National Police Agency.

The National Tax Service will continue to conduct comprehensive verification of ultra-high-value housing transactions in the first quarter of this year. Following the first round of investigations in October last year, a second group of cases will be selected for further investigation. In particular, transactions suspected of questionable funding sources, such as those involving individuals in their 30s or younger acquiring high-value real estate, will be scrutinized. So-called "smart single property" gift transactions in areas like the "Gangnam 4 Districts" and "Mayongseong" will also be reviewed to verify the appropriateness of reporting until the market stabilizes.

The Ministry of Land, Infrastructure and Transport, which is conducting a planned investigation into abnormal apartment transactions in the Seoul metropolitan area, aims to complete the investigation of transactions reported in the second half of last year within this year. For transactions reported in the first half of last year, where investigations have already been completed, 1,308 cases of suspected illegal activities were detected, including illegal gifting, false price reporting, and misuse of loan funds for purposes other than intended.

The National Police Agency has also been conducting a special crackdown on illegal activities, such as rental fraud and zero-capital gap investments, from October 17 last year to March 15 this year. As of January 9, a total of 137 individuals have been referred for prosecution, including three who have been arrested.

The Financial Services Commission will oversee thematic inspections of mutual finance central associations in the first quarter of this year. The focus will be on 166 mutual finance cooperatives that ranked in the top 20% in terms of personal business mortgage loan issuance as of last year, checking for regulatory violations such as omissions in screening or falsification of documents.

Kim Yongsoo, the Second Vice Minister of the Office for Government Policy Coordination and head of the Real Estate Supervision Task Force, stated, "We will respond strictly and with zero tolerance to real estate crimes that threaten the lives of ordinary citizens and young people, and I urge continued efforts to eradicate illegal activities."