'Purchase and Compensation as One?' Government Pushes to Separate Compensation Division from LH

After Land Purchase, 'Self-Compensation' Judged as a Problem
Hong Nam-ki: "LH Reform Measures to Eradicate Speculation and Prevent Recurrence to Be Announced by End of This Month"
Public Housing, Residential Welfare, and Urban Regeneration Functions to Be Retained
Limits of LH Reform Pointed Out as Public-Led Policy Remains

[Image source=Yonhap News]

[Asia Economy Reporters Jang Sehee and Lee Gwanju] The government is reportedly carefully considering a plan to separate the compensation function from the Korea Land and Housing Corporation (LH) as part of measures to eradicate real estate speculation by public officials.

LH purchases real estate and determines compensation levels for new town developments, but this related work is seen as leading to "self-compensation." While the government plans to introduce measures to completely reform LH, there are concerns that it will be difficult to propose innovation measures equivalent to "dismantling" LH, which plays a key role in the current administration’s housing supply policy.

A government official said on the 17th, "There is a strong sentiment that LH should not be in charge of the compensation part," adding, "We are considering separating the planning and finance headquarters function responsible for compensation or establishing a committee to review it."

Compensation is a core task in urban development, including land acquisition. The government’s consideration to separate this function stems from the judgment that the recent speculation by LH employees is related to compensation. While using internal information to purchase land is problematic, the act of planting trees in fields during the land acquisition process to receive higher compensation cannot be overlooked. The fact that development and compensation are handled as one process from new town development is said to have encouraged speculation.

The government plans to prepare measures for LH, including compensation, by the end of this month. Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said at the real estate market ministerial meeting held that day, "We will thoroughly inspect all aspects of LH, a huge public corporation with about 10,000 employees and assets worth 185 trillion won, including its roles and functions, organization and personnel, business structure and implementation, as well as strengthening integrity and ethical management." He added, "We are working toward announcing measures to eradicate speculation, prevent recurrence, and completely reform LH by the end of this month."

However, it is doubtful whether high-intensity measures to dismantle LH as the government intends will be introduced. Someone must take responsibility as long as the public-led housing supply policy is maintained. At the real estate ministerial meeting that day, the government also expressed its determination to proceed with the existing supply plan without any gaps. Deputy Prime Minister Hong said, "Real estate policies, including housing supply plans, will be implemented consistently and without disruption or pause according to plan." He added, "We plan to supply 243,000 housing units through the construction of the 3rd new town, and among these, we will conduct preliminary subscription for 62,000 units?30,000 units in the second half of this year and 32,000 units next year?to secure early opportunities for home ownership."

A government official said, "There is an opinion that public housing, residential welfare, and urban regeneration headquarters, which are closely related to the 2.4 supply plan, should be maintained." It is also highly likely that the 14 regional headquarters of LH in Seoul, Gyeonggi, Incheon, and other areas will remain as they are. Regional headquarters are considered essential to implement regional supply plans. It is reported that at the real estate ministerial meeting that day, there was consensus that since LH is responsible for implementing the supply plan, some functions must be retained.

Professor Shim Gyo-eon of Konkuk University’s Department of Real Estate said, "Since LH’s organization is very large and its functions are complex, it is questionable whether simply separating a few functions can prevent corruption." He added, "It is necessary to reestablish the organization considering both corruption prevention and functional efficiency, and to seek expert opinions through committees, etc."

Meanwhile, the Special Investigation Unit for Real Estate Speculation Crimes of the Southern Gyeonggi Police Agency conducted raids on six locations this morning, including the Ministry of Land, Infrastructure and Transport at the Government Sejong Complex, LH headquarters in Jinju, Gyeongnam, and Buksiheung Nonghyup. The government joint special investigation headquarters is conducting internal and external investigations on 37 cases involving 198 people related to real estate speculation allegations. Since the establishment of the "Police Reporting Center" on the 15th, 182 related reports and tips have been received as of the day before yesterday.

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