Ministry of Land, Infrastructure and Transport conducts investigation planning on foreign real estate speculation

The Ministry of Land, Infrastructure and Transport announced on June 24 that it plans to conduct an investigation planning on speculative real estate transactions by foreigners for the first time in cooperation with related agencies such as the Ministry of Justice, the National Tax Service, and the Korea Customs Service.

According to the Ministry of Land, Infrastructure and Transport, the number of housing transactions by foreigners is less than 1% of the total, but is increasing every year. The number of purchases increased significantly during the recent rise in house prices, from 6,676 in 2019 to 8,756 in 2020 and 8,186 in 2021.

Especially, there were cases where some foreigners bought houses. For example, one foreigner buying 45 houses. Also there were strange cases like, purchases by minors.

Accordingly, the Ministry of Land, Infrastructure and Transport decided to take a closer look at foreign real estate speculation by applying the same strict standards as Koreans do. From June 24, it was decided to conduct an investigation planning on speculative real estate transactions by foreigners for the first time together with related organizations such as the Ministry of Justice, the National Tax Service, and the Korea Customs Service.

First of all, out of 20,038 cases made nationwide from 2020, when the foreign transaction volume surged, to May of this year, 1,145 cases of suspected speculative transactions such as up/down contracts, trust of name, and expedient gifts will be investigated first.

A foreign real estate transaction permit zone system is newly established. If there are concerns about foreign real estate speculation, the “Act on Reporting of Real Estate Transactions, etc.” will be amended this year so that governors of provincial and city can determine and designate the target (foreigners, etc.) and target use (land containing housing, etc.). In this case, when foreigners or foreign corporations acquire land containing houses, they must obtain permission from the city, gun, and gu offices.

The types of foreigner visas that can be registered as rental business are also limited. Plan to promote the revision of the 'Special Act on Private Rental Housing' within this year, which restricts visas that can run rental business to some residents (F2), overseas Koreans (F4), permanent residents (F5), marriage immigrants (F6), etc. 

Considering the characteristics of foreigners whose place of residence is unclear, the designation of a domestic consignment manager and mandatory reporting when acquiring real estate for non-resident foreigners, and expansion of the target of submission of funding plans were also considered.

It is expected that non-resident foreigners will be forced to submit a funding plan unconditionally regardless of whether they are in a regulated area or not. In addition, various sanctions such as entry and exit restrictions for foreigners caught in illegal activities will be prepared.

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Reporter Jieun Lee