Hong Nam-ki "Considering Expanding Employment Restrictions for LH Executives After Retirement... Real Estate Policy to Be Finalized by Next Month" (Comprehensive)

Opening Remarks at the Real Estate Market Inspection Meeting of Relevant Ministers
Financial Supervisory Service Investigation Confirms Suspicious Illegal Activities at Buksiheung Nonghyup and Others

Hong Nam-ki, Deputy Prime Minister for Economy and Minister of Economy and Finance, is delivering opening remarks at the 22nd Real Estate Market Inspection Meeting of Related Ministers held at the Government Seoul Office in Jongno-gu, Seoul on the 20th. Photo by Kim Hyun-min kimhyun81@

[Sejong=Asia Economy Reporter Kim Hyun-jung] On the 20th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, announced that he would prepare a government plan for organizational innovation regarding the real estate speculation allegations involving employees of Korea Land and Housing Corporation (LH) and initiate consultations between the ruling party and the government. He stated that the previously announced measures to prevent speculation recurrence would be applied more strictly, and plans to expand the scope of post-retirement employment restrictions to eradicate corruption would also be considered. Regarding ongoing real estate policy issues under discussion with the ruling party, such as raising the comprehensive real estate tax threshold and easing capital gains tax, he intends to reach a conclusion and announce it by next month.

Deputy Prime Minister Hong chaired the 22nd Real Estate Market Inspection Meeting with related ministers at the Government Seoul Office in the morning and made these remarks during his opening statement. He said, "The ‘LH Innovation Task Force,’ which includes relevant ministries and private experts, has been reviewing the matter, and at today’s (20th) meeting, we have virtually prepared a government plan and plan to proceed with consultations between the ruling party and the government. We will apply the March 29 measures to prevent speculation recurrence more strictly to LH, and additionally, to eradicate corruption such as design competitions and bidding irregularities, we will further consider expanding the scope of post-retirement employment restrictions for LH employees," he explained.

He added, "Regarding the reorganization and functional reform of LH, the government will review it under the principle of bold innovation that meets public expectations, consistent promotion of housing supply, and strengthening of residential welfare. Along with devising strong management innovation measures, we will hold LH accountable for this incident by conducting the strictest and most rigorous evaluation of LH’s 2020 management performance (to be announced in late June). We will also review whether to revise previous evaluation results based on investigation outcomes if relevant," he emphasized.

Regarding the real estate speculation allegations, the Financial Supervisory Service confirmed the use of undisclosed information by 25 individuals including LH employees, public officials, and their relatives, suspected violations of the Farmland Act, and illegal activities involving 40 individuals. They have requested the Joint Special Investigation Headquarters to conduct the first investigation. The investigation targets include Buk Siheung Nonghyup, Nonghyup Bank Sejong Government Complex Branch, Bucheon Livestock Nonghyup, and Nonghyup Bank Daegu Duryu Branch. Deputy Prime Minister Hong stated, "Regarding allegations of improper handling of loans for farmland and commercial property purchases by employees, we are proceeding with disciplinary procedures through financial supervisory agencies and will take necessary measures such as system improvements."

Regarding real estate policy, he said that while maintaining the framework and principles, any necessary changes will be concluded and announced by next month after gathering public opinion and conducting consultations between the ruling party and the government. He expressed the intention to accelerate discussions on tax law revisions, including raising the comprehensive real estate tax threshold. He said, "It is urgent to eliminate debates and uncertainties about possible changes to existing real estate policies," and regarding recent market instability, he noted, "There is a significant aspect caused by increased supply-demand uncertainty after the April by-elections, and resolving this is urgent."

The Seoul apartment market saw an increase in price growth after the by-elections, with the second week of May recording a 0.09% rise, close to the 0.1% increase in the first week of February when the February 4 housing supply plan was announced. The Gangnam 4 districts rose even more at 0.14%. Deputy Prime Minister Hong pointed out that the Korea Real Estate Board’s sales supply-demand (buyer dominance) index rose from 96.1 in the first week of April to 103.5 in the second week of May, stating, "The shift from buyer dominance to seller dominance since mid-April is a change that must be closely monitored."

He stressed that amendments to nine related laws, including the Public Housing Special Act, must be completed this month to expedite the February 4 supply plan. He said, "We have secured sites capable of supplying 217,000 housing units so far, and expectations on the ground are steadily rising. Once the laws are amended, the government will prepare to promptly proceed with follow-up procedures such as designating planned districts in the second half of the year." He added, "To ensure smooth implementation of various housing supply measures, including the February 4 plan and private reconstruction and redevelopment, it is important to provide clear direction and confidence regarding redevelopment projects. We will promote market stability through practical cooperation such as forming consultative bodies between the government and local governments for designating candidate districts under the February 4 plan."

Furthermore, he emphasized, "Real estate issues are complex matters akin to high-level simultaneous equations. They require consideration of market supply and demand, policy tools, associations, and even psychological factors, so it is something our entire society must solve together." He added, "I hope the perception that a home is not just something to ‘buy’ but a ‘place to live,’ and that it is a legitimate investment for residential welfare rather than speculation for windfall profits, will become widely established in our society."

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