Minors Acquire 12 Apartments Using 'Appa Chance'... 570 Suspicious Illegal Transactions Detected

Case 1. Minor A purchased 12 low-priced apartments, funding all the necessary capital from his father. The Ministry of Land, Infrastructure and Transport (MOLIT) regarded this as an illicit gift and reported it to the National Tax Service.

Case 2. Corporate representative B transferred ownership of 32 apartments owned by himself, his spouse, and his brother to a corporation he represents without any payment. Additionally, he personally paid the acquisition tax that the corporation was supposed to pay. The police plan to investigate on suspicion of corporate name trust.

From July 2020 to September last year, MOLIT conducted a detailed investigation on 1,808 suspicious transactions out of 89,785 corporate and non-local buyer transactions of low-priced apartments nationwide. On the 3rd, MOLIT announced that it detected 570 suspected illegal cases and reported them to relevant agencies. By type and reporting agency, 45 cases were reported to the National Police Agency for violations such as corporate name trust, 258 cases to the National Tax Service for illicit gifts among family members, 322 cases to local governments for failure to submit explanatory materials, and 2 cases to the Financial Services Commission for misuse of loans.

After the announcement of the ‘7·10 Measures’ in 2021, criticism arose that apartments priced below 100 million KRW became a blind spot for regulations and a target for multi-homeowner speculation. In response, MOLIT conducted a large-scale survey from November last year to last month over three months.

The survey results showed that the proportion of corporate and non-local buyer transactions, which was 29.6% of all apartment transactions in July 2020, surged to 36.8% in December of the same year and 51.4% in August last year.

Also, in low-priced apartment purchases by corporations and non-local buyers, the ratio of self-funding was 29.8%, and the ratio of lease deposit succession was 59.9%. Compared to the average self-funding ratio of 48.1% and lease deposit succession ratio of 23.5% in typical apartment transactions, MOLIT pointed out that corporate and non-local buyer transactions involve less personal money while the ‘gap investment’ ratio through lease deposits is about twice as high.

By region, areas with concentrated corporate and non-local buyer purchases were Cheonan and Asan in Chungnam (about 8,000 cases), Busan and Changwon in Gyeongnam (about 7,000 cases), Bucheon in Incheon and Gyeonggi (about 6,000 cases), Cheongju in Chungbuk (about 5,000 cases), and Gwangju (about 4,000 cases), in that order.

The average purchase price by corporations and non-local buyers was 102.33 million KRW, slightly exceeding 100 million KRW, which corresponds to below 100 million KRW based on official appraisal prices. There were 6,407 cases of short-term purchase and sale. Their average trading profit was 17.45 million KRW, 20.7% higher than the average profit of 14.46 million KRW for all low-priced apartment transactions. The average holding period for short-term purchase and sale cases was only 129 days, and the majority of sellers were locals (40.7%). MOLIT analyzed that corporations and non-local buyers accumulated low-priced apartments through ‘gap speculation,’ raising transaction prices and reselling them to actual demanders within a short period to earn high capital gains. Especially, the high ratio of lease deposits in transaction amounts raises concerns about ‘empty lease’ risks if housing prices fall in the future.

Looking at the suspected illegal cases, many involved corporate multi-home purchases, gap speculation, minor purchases, and direct transactions among family members.

For example, one corporation purchased 33 low-priced apartments through lease deposit succession and received all necessary self-funding from the corporate representative. MOLIT reported this transaction to the National Tax Service, suspecting it to be a corporate transaction for tax evasion.

There were also cases where low-priced apartments were purchased with corporate loans from specialized credit companies (capital), and the loans were found to be misused for purposes other than the loan’s intended use. According to the Financial Services Commission’s investigation, if misuse is confirmed, the loan will be recovered.

Kim Hyung-seok, Director of Land Policy at MOLIT, stated, "The 570 suspected illegal transactions detected this time will undergo follow-up actions through investigations by relevant agencies."

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