1,145 suspicious cases of speculative transactions between 2020 and May 2022
Investigation conducted until September, results announced in October
Produce statistics on foreign housing ownership from next year
Amendment to the Act on ‘Designation of Foreign Trade Permit Zone’
A government-wide planned investigation is carried out on speculative real estate transactions by foreigners.
This planned investigation on foreign speculative transactions, which will be held for a total of 4 months from this month 24 to September, is the first pan-government investigation involving the Ministry of Land, Infrastructure and Transport, the Ministry of Justice, the National Tax Service, and the Korea Customs Service.
In this investigation, the government conducted a survey on the 1,000 suspected cases of speculative transactions such as up/down contracts, title trusts, and expedient donations, centering on 2338 housing transactions (including sale rights) that were traded nationwide from January 2020 to May this year. 145 cases were selected as the primary investigation target.
In this regard, it has been pointed out that this is a blind spot because some foreigners, who are relatively free compared to Koreans who take out loans in their home countries, are not properly managing real estate speculation when acquiring real estate.
In fact, the number of housing transactions by foreigners is relatively low, accounting for less than 1% of the total transaction volume, but it has increased significantly from 6,000 in 2017 to 8,186 last year due to the recent rise in house prices.
In the process, abnormal accumulations such as one foreigner buying up to 45 houses, housing purchases by minors aged 8 years old, and 47.7% of all transactions between foreigners are sold in the form of direct transactions.
In the first planned investigation of foreign speculative real estate transactions, which will be conducted until September, the government closely examines △purchasing by minors △direct transactions between foreigners △multiple purchases by the same person nationwide △gap speculation and violation of rental business qualifications △newly priced and ultra-high-priced housing transactions. plan to see.
In addition, considering the peculiarity of being a foreigner, the investigation will be conducted in cooperation with the Ministry of Justice, which has information such as status of residence and address, and the Korea Customs Service, which cracks down on illegal foreign exchange transactions.
For suspected illegal acts discovered during this four-month investigation, the National Tax Service, Financial Services Commission, and local governments are notified of tax evasion, loan analysis and imposition of fines. Violations of the ‘Foreign Exchange Transaction Act’ and ‘Immigration Control Act’ will be notified to the Korea Customs Service and the Ministry of Justice to take action.
The government plans to conduct the first investigation until September of this year, but if necessary, it will be extended.
In the future, we plan to expand the scope of investigation to include foreigners’ land transactions and establish a continuous monitoring system for foreign speculation. Additional investigations will be initiated when abnormal trends are detected.
Meanwhile, the Ministry of Land, Infrastructure and Transport is planning to improve the system by reorganizing related statistics to systematically respond to illegal acts of foreigners in real estate transactions.
Currently, statistics on foreigners’ land ownership and transactions are under management, but there are limits to the detection of speculation, such as no statistics on the status of foreign housing ownership. It plans to produce statistics on foreign home ownership.
In addition, if there are concerns about foreign real estate speculation, the mayor/do governor decided to promote the revision of the Act on Real Estate Transaction Report, etc. within this year so that the mayor/do governor, etc. can designate a transaction permission zone by specifying the target use, such as land containing foreign residents and housing.
At the same time, amendments to the Special Act on Private Rental Housing restricting the types of foreigner visas that can be registered as rental business operators to ‘Resident (F2), ‘Overseas Koreans (F4)’, ‘Permanent Residence (F5)’, and ‘Marriage Immigration (F6)’. is promoted
Meanwhile, the Ministry of Land, Infrastructure and Transport held the first meeting on the 21st of this month following the establishment of the ‘Foreign Real Estate-Related Institutions Consultative Group’, a cooperative system among related agencies such as the Ministry of Justice, the National Tax Service, and the Customs Service to systematically respond to illegal acts of foreigners in real estate transactions.
At this meeting, government ministries discussed systems related to foreign real estate transactions and measures to prevent and respond to speculative real estate transactions. It was decided to review the introduction of an institutional mechanism to induce payment.
In addition, data related to transactions suspected of foreign speculation, such as the purchase of high-priced houses with funds from unknown sources, will be regularly shared with the relevant agencies of the Korea Customs Service to strictly crack down on illegal activities.
In particular, considering the characteristics of foreigners whose place of residence is not clear, when acquiring real estate for non-resident foreigners, we review system improvements, such as designation of a domestic consignee and mandatory reporting, and expansion of the target of submission of funding plans. Various sanctions are also devised.