Foreigners Required to Submit Funds Procurement Plan When Purchasing Homes Starting Next February

[Financial News] The government will require foreigners to submit a Funds Procurement Plan and supporting documents when acquiring homes within Land Transaction Permit Zones, as part of efforts to curb real estate speculation. Additionally, visa status and whether the buyer has a domestic address or has resided in Korea for more than 183 days will be included in transaction reports, significantly strengthening the verification of foreign capital flows and the purpose of property acquisition.
On the 9th, the Ministry of Land, Infrastructure and Transport (MOLIT) announced that the amended Enforcement Decree of the Act on Report on Real Estate Transactions, Etc., which includes these measures, has been promulgated and will take effect from February 10 next year. This revision was prepared based on an analysis of transaction trends after major areas in the Greater Seoul area were designated as Land Transaction Permit Zones in August to prevent housing speculation by foreigners.
According to MOLIT, there were 1,080 foreign residential property transactions in the Greater Seoul area from September to November, a 40% decrease compared to 1,793 transactions during the same period last year. Notably, transactions involving non-resident foreigners appointing a Trustee dropped from 56 to just one, a 98% reduction. The government attributes this decline to stricter requirements for actual residence and the introduction of the permit system, which have curbed speculative demand.
Under the revised regulations, if the buyer is a foreigner, it will be mandatory to provide visa status and information regarding their address or residence when reporting a transaction. This aims to preemptively block illegal activities such as unauthorized leasing and tax evasion, and allows for immediate review of the appropriateness of Trustee appointments.
Furthermore, when acquiring a home with a permit in a Land Transaction Permit Zone, submission of a Funds Procurement Plan and supporting documents will become mandatory. The system has been updated to require detailed reporting of overseas funding sources, such as foreign loans, deposits, and the names of overseas financial institutions, as well as domestic funding details, including whether a deposit is being transferred or if the purchase is financed for business purposes. MOLIT expects these changes will expedite investigations into market-disturbing activities and the enforcement of tax measures.
To accommodate the expanded reporting requirements, the Real Estate Transaction Reporting System and Electronic Contract System will also be improved. The systems will be ready to accept online submissions as soon as the revised regulations take effect.
Park Jun-hyung, Director of Land Policy at MOLIT, stated, "With this amendment to the Enforcement Decree, we will proactively prevent speculative activities by foreigners and establish a transaction order focused on actual demand, thereby contributing to housing price stability."
en1302@fnnews.com Jang In-seo Reporter