"More Thorough Verification of Home Purchase Funds"... Strengthening Investigation of Funding Plans

Expansion of 'High-Intensity Investigation Targets' in Funding Plans from the 21st
Mandatory Submission of More Objective Evidence
Proactive Investigation of Abnormal Transactions Possible... Increased Monitoring by Ministry of Land, Infrastructure and Transport

(Photo by Yonhap News)

[Asia Economy Reporter Moon Jiwon] The government has announced plans to establish a 'Real Estate Market Illegal Activities Response Team' to intensively investigate various illegal real estate activities. Starting from the end of this month, investigations into the sources of home purchase funds will also be significantly strengthened.

According to the Ministry of Land, Infrastructure and Transport on the 4th, the current 'high-intensity investigation target' areas for the submission of funding plans, which are limited to the 25 districts of Seoul, will be expanded from the 21st to cover all areas required to submit funding plans. The additional areas include Gwacheon, Seongnam Bundang, Gwangmyeong, Hanam in Gyeonggi Province, Suseong District in Daegu Metropolitan City, and Sejong Special Self-Governing City.

Accordingly, in speculative overheated districts outside the existing 25 districts of Seoul, thorough and broad investigations will be conducted into suspicious abnormal funding transactions, such as excessive borrowing, cash-based transactions, and suspected loans between family members, which are difficult to consider as normal funding.

The Ministry explained, "With the amendment of the 'Enforcement Decree of the Real Estate Transaction Report Act,' which includes the expansion of the areas required to submit funding plans announced in the December 16 measures, taking effect next month, the areas required to submit funding plans will be expanded to include adjusted areas, etc. We expect high-intensity focused investigations to be conducted more widely."

Currently, the submission of funding plans is required for homes priced at 300 million KRW or more in speculative overheated districts, but this will be expanded to homes priced at 300 million KRW or more in speculative overheated districts and adjusted areas, and homes priced at 600 million KRW or more in non-regulated areas.

Furthermore, from next month, the submission of supporting documents such as bank balance certificates, tax payment certificates, and debt certificates will be mandatory for each item in the funding plan, which is expected to significantly advance the timing of investigations into suspicious transactions.

Until now, when reporting actual real estate transactions, objective proof of funding was not required, so the Ministry of Land, Infrastructure and Transport only collected supporting documents for completed sales transactions to conduct investigations. As a result, there were many criticisms that rapid response and proactive investigations into suspicious abnormal funding transactions were difficult.

However, since the December 16 measures announced last year included a requirement to submit objective supporting documents along with funding plans when reporting actual transactions for homes priced over 900 million KRW in speculative overheated districts, more thorough investigations will now be possible.

The Ministry stated, "Once the amended law is enforced, the Ministry of Land, Infrastructure and Transport and the Korea Real Estate Board will directly verify the submitted supporting documents at the time of reporting together with related agencies such as the National Tax Service and the Financial Services Commission to quickly determine the appropriateness of buyers' funding and whether there are any suspicious transactions."

They added, "In cases where abnormal funding is suspected, investigations will begin before the completion of the sales contract to check for any issues in the entire transaction process, including the payment of the deposit and the balance."

This content was produced with the assistance of AI translation services.