The buyer purchased an apartment located in Gangnam-gu, Seoul, for 4.5 billion won, borrowing a total of 700 million won from family corporations. They borrowed 200 million won from Corporation A, where their spouse is an inside director, 300 million won from Corporation B, where their father is an inside director, and 200 million won from Corporation C, where their mother is an inside director. The Ministry of Land, Infrastructure and Transport was unable to verify the legitimate accounting treatment of the borrowed amounts from the corporations in the apartment transaction. Ultimately, the buyer has been listed for reporting to the National Tax Service due to suspicion of misappropriation of corporate funds.
In the housing transactions in Seoul from January to February this year, 108 suspected illegal transactions were detected. Cases of misappropriation of loan funds or the illegal gifting of apartments were prevalent. Last year, there were nearly 700 suspected illegal transactions in the metropolitan area involving housing and transfer rights.
The Ministry of Land, Infrastructure and Transport announced on the 28th that it detected 108 suspected illegal transactions as a result of joint on-site inspections and planned investigations of abnormal housing transactions in the Seoul area from January to February this year.
The on-site inspections were conducted jointly by the Ministry, the Seoul Metropolitan Government, and the Korea Real Estate Board from March 10 to 23 this year, targeting 80 apartment complexes in major areas of Seoul, including Gangnam, Seocho, and Songpa districts, as well as Mapo, Yongsan, and Seongdong districts. Detailed planned investigations were carried out by the Ministry and the Real Estate Board.
The types of suspected illegal transactions include illegal gifting, misappropriation of loan funds, and false reporting on contract dates. A representative example of suspected illegal gifting is a case where the buyer purchased an apartment while keeping it under lease, entering into a contract with the seller (the parents) as the tenant. This buyer purchased an apartment located in Nowon-gu, Seoul, for 1.3 billion won and signed a lease contract with a deposit of 850 million won with the seller (the parents) as the tenant.
There are also cases suspected of misappropriating loan funds. The buyer purchased an apartment located in Seocho-gu, Seoul, for 4.35 billion won while obtaining a loan of 1.4 billion won from a financial institution for corporate operating funds. However, this loan was used to purchase the apartment, unrelated to the business. This constitutes misappropriation of loan funds for purposes other than intended.
The Ministry plans to notify the National Tax Service, the Financial Services Commission, the Ministry of Interior and Safety, and the relevant local governments about the suspected illegal transactions detected through on-site inspections and planned investigations, and to request an investigation from the Korean National Police Agency based on the violations.
In addition, the joint on-site inspections by relevant agencies will continue in June, targeting all areas of Seoul, including regions where there are concerns about a balloon effect due to the expansion of designated land transaction permission areas, and planned investigations will also continue for transaction reports after March '25.
The Ministry detected a total of 555 transactions (701 suspected illegal acts) in the planned investigation of abnormal housing transactions in the metropolitan area from October to December last year. During the planned investigation of transfer rights for metropolitan area apartments last year, a total of 133 transactions (190 suspected illegal acts) were detected and reported to the National Tax Service, the Financial Services Commission, and local governments.
Furthermore, the Ministry detected 499 unregistered transactions (0.22% of all transactions) among over 224,000 apartment transactions reported nationwide in the first half of last year. The Ministry conducts annual monitoring of 'unregistered transactions' to establish a system for mandatory reporting of real estate transaction cancellations and to detect false reports. Regarding the detected cases, the Ministry notified the reporting authority (city/county/district) to request additional investigations and administrative actions for false reports and unreported cancellations.
The Ministry began planned investigations of direct transactions with the potential for illegal gifting, among housing transactions from January last year to February of this year, starting in March. In cases where illegal circumstances are suspected, the plan is to block unfair practices through notifications to relevant agencies.
Kim Gyu-cheol, head of the Housing and Land Division at the Ministry, said, "It is essential to crack down on illegal and unfair practices that disrupt the order of real estate transactions for market stability and to establish a fair and transparent transaction order," adding, "Along with continuous monitoring of abnormal transactions, we will thoroughly block speculative demand through joint inspections and planned investigations by relevant departments and local governments."