Why Are the Police and Prosecutors Involved in Real Estate?

Police Agency Launches Special Crackdown
Prosecutors Expand Investigations into Speculation
Widespread Criticism Emerges Amid Public Distrust of Real Estate Policies

On the 5th of this month, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is speaking at the 1st Real Estate Market Inspection Meeting held at the Government Seoul Office in Jongno-gu, Seoul. Next to Deputy Prime Minister Hong, Kim Chang-ryong, Commissioner of the National Police Agency, is seated./Photo by Moon Ho-nam munonam@

[Asia Economy Reporters Lee Gwan-ju and Cho Seong-pil] Amid heated controversy over the establishment of a government-level real estate supervisory body, public resentment is growing against the involvement of investigative agencies in the real estate market. Although a policy approach based on market economy principles is necessary, there is considerable criticism that a typical "punishment omnipotence" approach, trying to control the market through regulation and crackdowns, is being reflected.

On the 6th of this month, the National Police Agency abruptly announced it would launch a "special crackdown on real estate market disruption." This came immediately after National Police Chief Kim Chang-ryong attended the "Real Estate Market Inspection Meeting of Related Ministers," chaired by Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki the day before. It is highly unusual for the police chief to attend a ministerial meeting, especially one unrelated to public security administration, such as a real estate meeting. This is interpreted as a signal that the government intends to intervene in the real estate market using police power.

Accordingly, the police immediately formed a special investigation team of 50 members within the intelligence crime investigation units of eight provincial police agencies overseeing speculative overheating zones and regulated areas. Additionally, all 255 police stations nationwide decided to strengthen intelligence gathering on illegal real estate activities within these areas and conduct focused crackdowns.

The police selected five key crackdown targets: ▲disruption of transaction order (such as trading subscription savings accounts, resale of pre-sale rights, and planned real estate fraud) ▲illegal brokerage activities (such as price collusion) ▲corruption in reconstruction and redevelopment ▲public housing rental fraud ▲and jeonse (long-term deposit lease) scams. The National Police Agency emphasized, "We will mobilize all investigative capabilities until the real estate market stabilizes."

Earlier, on the 21st of last month, Minister of Justice Chu Mi-ae also instructed the prosecution to respond strictly to illegal real estate speculation offenders. The main points include investigating ▲illegal acts by planned real estate and real estate-specialized private equity funds and other financial speculative capital ▲unauthorized development in greenbelt and farmland areas ▲nominee transactions ▲illegal real estate brokerage activities ▲and tax evasion, as well as thoroughly recovering criminal proceeds. A senior official from the Supreme Prosecutors' Office stated, "The directive was issued officially and communicated to frontline offices to cooperate with related agencies and crack down on and investigate relevant crimes according to local circumstances." The prosecution plans to expand the scope of investigation command and seek higher sentences in trials against illegal real estate speculation offenders than before.

However, there is considerable backlash against the active deployment of investigative agencies to address real estate market issues. Online real estate communities are filled with criticism that the government's policy failures, which caused the "real estate disaster," are being blamed on individuals. On "Real Estate Study," the largest real estate community, angry posts are flooding in, saying things like "They see people who diligently save money and increase their assets as no different from gangsters," "Seeing countless genuine buyers as speculators is completely misguided," and "They should start by arresting the Blue House secretariat."

Investigations by law enforcement into illegal real estate activities are not unprecedented. In 2018, the Seoul Metropolitan Police Agency arrested 1,090 people, including subscription savings account brokers and illegal resellers who led illegal apartment resales. In May, 454 people, including brokers involved in illegal resales and fraudulent subscriptions, forgery experts, and sellers who handed over subscription accounts for money, were arrested by the police. However, the problem lies in the timing and intensity of the crackdown. In a situation where distrust in real estate policy is severe, the government's large-scale crackdown using the prosecution and police can be seen as an attempt to shift responsibility for policy failure onto individuals.

Professor Lee Woong-hyuk of Konkuk University's Department of Police Science pointed out, "Rather than consistent law enforcement, it appears to be riding on the regime's interests and timeliness," adding, "Under the pretext of cracking down on market disruption by speculators, the state's punitive power is intervening in the real estate market disruption."

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