'Real Estate Transaction Analysis Institute' to Monitor Loans, Taxes, and Credit Information

Representative Jin Seong-jun's Proposal... De Facto Government Plan
Analysis Agency Can Request Loan, Tax, and Credit Information
Mandatory Electronic Contract System for Real-Time Monitoring
Introduction of Reporting and Registration System for Sales, Consulting, and Information Services

[Asia Economy Reporter Moon Jiwon] The government and the ruling party are granting extensive powers, including access to personal loan and tax payment records, to the 'Real Estate Transaction Analysis Institute' (hereinafter referred to as the Analysis Institute) they are planning to establish. The use of an electronic contract system will be mandatory for key areas such as land transaction permit zones, enabling the Analysis Institute to monitor real estate transaction information such as sales and jeonse (long-term lease) in real time. However, concerns are rising that excessive government intervention in the market could lead to side effects such as privacy violations and a contraction in actual transactions.

According to the ruling party and government on the 6th, Jin Seong-jun, a member of the Democratic Party of Korea, introduced a bill titled the 'Act on Real Estate Transactions and Real Estate Service Industry' containing these provisions. The core of the bill is to expand and reorganize the current illegal activity response team under the Ministry of Land, Infrastructure and Transport into the Analysis Institute. Jin’s bill is essentially the government’s proposal, serving as the legal basis for establishing the Analysis Institute, a real estate market oversight body ordered by President Moon Jae-in last August.

Through consultations, the ruling party and government have prepared specific powers along with the establishment basis for the Analysis Institute. According to the bill submitted by Jin, the Analysis Institute will have significant authority as initially expected. The head of the Analysis Institute can request tax information and business registration details from administrative agencies to investigate real estate transaction reports. They can also obtain and verify financial transaction information and credit data from financial institutions. This means they can thoroughly examine individuals’ loan accounts and more. Although the bill stipulates that the Analysis Institute can request information only to the extent necessary due to privacy concerns, the criteria remain vague.

The Analysis Institute can provide related information to the Ministry of the Interior and Safety, the National Police Agency, the National Tax Service, the Financial Services Commission, and the Financial Supervisory Service if it deems it necessary to take measures such as criminal investigations related to real estate transactions, tax evasion investigations, or collection of tax delinquents. It will have authority over managing and analyzing real estate-related information, investigating reported contents, reviewing legal violations, and cooperating with investigative agencies. However, the authority to check financial transactions in real time is not included.

A plan has also been prepared to mandate the use of electronic contract systems when concluding real estate transaction contracts in public housing, private rental housing, areas where resale is restricted, land transaction permit zones, and regions where transparent management of real estate contract information is necessary. This will enable the government to grasp transaction status in major areas such as Seoul in real time.

A reporting and registration system will also be introduced for real estate sales businesses, consulting businesses, information provision businesses, and sales agency businesses. Until now, such companies only needed to register as service businesses with the National Tax Service, but going forward, they must report and register with the Ministry of Land, Infrastructure and Transport and will be punished if they fail to comply with obligations or engage in prohibited acts. This means legalizing free industries to minimize regulatory blind spots.

The number of personnel, organization, and operation methods of the Analysis Institute will be determined by presidential decree. It is expected to have around 100 staff according to government insiders. If the bill passes during this regular session of the National Assembly, the Analysis Institute is scheduled to officially launch early next year, one month after the law is promulgated. The mandatory electronic contract system is expected to be fully implemented two years after promulgation.

However, the industry expresses concerns that the launch of the Analysis Institute could cause market distortions by suppressing actual transactions. An industry official said, "With increasing regulations causing instability in the sales and jeonse markets, the launch of the Analysis Institute will only cause further distortions," adding, "There are concerns about transaction contraction and administrative inefficiency."

View of Seoul apartments from the 63 Building observatory./Photo by Hyunmin Kim kimhyun81@

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