Catching All Abnormal Transactions and False Reports in Designated Trading Permission Areas... On-Site Crackdown on Real Estate Agencies

[Asia Economy Reporter Lee Chun-hee] The government has launched a high-intensity investigation into Seoul’s Gangnam, Songpa, and Yongsan districts, where concerns about overheating have arisen following the announcement of large-scale development plans. All transactions suspected of abnormal activity or false contract date reporting will be investigated, and joint on-site crackdowns will be conducted together with local governments.

The Ministry of Land, Infrastructure and Transport’s Real Estate Market Illegal Activity Response Team announced on the 15th that, as a result of a high-intensity real transaction planned investigation targeting major overheating concern areas following the announcement of large-scale development plans, 66 out of a total of 474 reported transactions from the time of the development plan announcement until the end of last month are suspected to be abnormal transactions.

The Response Team explained that through a planned investigation conducted with the Korea Real Estate Board’s permanent real transaction investigation team, a total of 474 transactions were examined?319 in the Gangnam and Songpa areas and 155 in the Yongsan area?and 66 transactions suspected of abnormal activity such as minor transactions, excessive cash and private loan transactions, and internal corporate transactions were identified. In particular, among the transactions reported after the designation of the land transaction permission zone took effect, 178 cases where the contract date was reported as prior to the effective date were all included in the investigation. This was to closely verify whether false contract date reporting was made to evade the permit system.

Currently, these areas are designated as land transaction permission zones. The Ministry of Land, Infrastructure and Transport and Seoul City designated the areas near projects such as the Yongsan Railroad Maintenance Depot development, Jamsil MICE (Meetings, Incentives, Conventions, and Exhibitions), and Yeongdong-daero underground space complex development as land transaction permission zones due to concerns about overheating in housing prices caused by these projects. Any real estate transaction exceeding 18㎡ for housing or 20㎡ for commercial properties based on land share within the permission zones requires approval from the basic local government. Since the designation of the permission zones took effect on May 20 for Yongsan and from the 23rd of last month for the Gangnam area, the government aims to completely block attempts to evade the permit system through false reporting.

The Response Team plans to begin a detailed investigation by requesting submission of explanatory materials from parties involved in suspected abnormal transactions. After reviewing explanatory materials such as proof of funding sources, financing documents, and financial transaction confirmations, if violations of the 'Real Estate Transaction Reporting Act' are confirmed, the relevant district office will be notified to impose fines. If tax evasion is suspected, the National Tax Service will be notified; suspected cases of illicit loans will be reported to the Financial Services Commission, Financial Supervisory Service, and Ministry of the Interior and Safety; and suspected real estate criminal activities will be reported to the relevant police station or directly investigated to ensure effective measures are taken.

The area of Jamsil-dong, Songpa-gu, Seoul, designated as a land transaction permission zone.
[Image source=Yonhap News]

Active measures will also be taken against the balloon effect. Following the designation of land transaction permission zones in Gangnam and Songpa districts, concerns about market overheating and illegal activities have increased in the peripheral areas outside the permission zones. Therefore, the scope of the planned investigation, which was previously limited to within the permission zones, will be expanded to include Dogok-dong in Gangnam-gu and Sincheon-dong in Songpa-gu. In particular, the Response Team plans to closely review funding plans for transactions conducted after the announcement of the measures.

Additionally, planned investigations will be conducted on major complexes in overheated metropolitan areas such as Gwangmyeong, Guri, and Gimpo cities in Gyeonggi Province, where market instability continues.

From the 15th, joint on-site inspections will also be conducted. The 'Real Estate Market Joint On-site Inspection Team,' composed of officials from local governments such as Seoul City, basic local government officers, and special judicial police officers, will be activated from this day. Since 2016, the joint on-site inspection team has been activated 15 times over four years and has uncovered 420 violations of the Licensed Real Estate Agents Act, including illegal brokerage and failure to provide mandatory explanations.

The Ministry of Land, Infrastructure and Transport plans to focus on cracking down on real estate transaction order disturbances such as price collusion and illegal brokerage activities at brokerage offices in additional regulated areas within the metropolitan area and in overheating concern areas where prices continue to rise through this joint on-site inspection. If violations are confirmed, administrative actions such as cancellation of registration and suspension of business by the competent authorities will be taken, along with criminal charges for price collusion and related offenses.

Kim Young-han, Director of Land Policy at the Ministry of Land, Infrastructure and Transport and head of the Response Team, said, "In a situation where market overheating is a concern due to recently announced large-scale development plans such as the Jamsil MICE development project and Yeongdong-daero underground space complex development project, we will thoroughly detect speculative and illegal transactions through planned real transaction investigations and respond firmly." He added, "We expect the Response Team’s enforcement capabilities to continuously improve through institutional improvements such as expanding the scope of submission of funding plans and supporting documents announced in the 'Housing Market Stabilization Management Plan (June 17 Real Estate Measures),' and we will do our best to ensure there are no blind spots in managing illegal real estate activities in the future."

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