346 suspicious real estate deals flagged in new housing supply areas

South Korean authorities have detected 346 suspicious real estate transactions, involving potential violations, in areas slated for new housing development across the Seoul metropolitan region. The findings stem from an intensive investigation into 1,072 transactions conducted over the past five years (January 2021 to February 2024) near sites announced for urban housing expansion.

The investigation, carried out by the Ministry of Land, Infrastructure, and Transport's planning and investigation team, uncovered a range of irregularities. The most common violations, accounting for 249 cases, involved false reporting of prices and contract dates. Additionally, 178 cases involved excessive borrowing from related parties, 16 cases concerned the misuse of loan funds, and 14 cases violated the Public Real Estate Agent Act.

One notable case involved a corporate buyer purchasing a detached house for 2.7 billion won in Yongsan-gu, Seoul. The buyer used a short-term loan of 800 million won from the company's CEO for the down payment and subsequently secured an 800 million won working capital loan to repay the CEO. This working capital loan, intended for regular business expenses, was effectively used for real estate acquisition, leading to its notification to the Financial Services Commission and the Financial Supervisory Service for misuse of funds.

Penalties for confirmed violations can be severe, including fines up to 10% of the acquisition price, recovery of unpaid taxes, recall of loans, and imprisonment for up to one year or a fine of up to 10 million won. The Ministry of Land, Infrastructure, and Transport, along with the Korea Real Estate Board, is continuing to monitor market trends in areas designated as regulated or newly regulated zones, as well as adjacent areas where speculative effects are anticipated.

Authorities are also investigating transaction trends in newly designated land transaction permit zones, such as areas for the Honam semiconductor complex. The government has pledged to continue proactive investigations into suspicious transactions that disrupt market order and to take strict measures in cooperation with relevant agencies when violations are confirmed.

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We will actively pursue planned investigations into abnormal transactions that disrupt market order, and if suspicious transactions are confirmed, we will take strict measures in cooperation with relevant agencies.