LH to Log Third-Party Inquiries on Purchase-Lease Properties; Purchase Process Halted After Two or More Inquiries

[Financial News] Going forward, if brokers or others, rather than the person seeking to sell a home to Korea Land and Housing Corporation (LH), inquire about the same property at least twice, the purchase process will be halted.
On the 26th, LH said the new system applies to third parties with no direct interest in properties under its purchase-lease program. If representatives of outside organizations or former LH employees and executives—rather than the seller-applicant or the building’s architect or contractor—request information about a particular property or a consultation, the employee in charge must enter it into the system as an official record. Until now, the main approach had been to report misconduct after it came to light. The new system is designed to screen out brokerage and improper solicitation by brokers and others from the outset, focusing on preventing illegal activity at the seller-application stage.
Registered inquiries trigger a two-step set of sanctions for the seller-applicant. When a third-party inquiry is received for the first time, LH immediately sends the seller-applicant a text message marked “Caution” to inform them. The message also warns that if it happens again, the applicant could face penalties such as an audit request or a halt to the purchase. If third-party inquiries about the same property recur two or more times, LH considers the case suspicious for improper solicitation. In that case, it requests an audit by its Audit Office and halts the purchase process for the property until the audit results are available. To ensure seller-applicants who are unaware of what is happening are not harmed, these provisions will also be included in future notices for the purchase-lease program.
LH has so far excluded properties from purchase reviews when improper conduct such as solicitation was confirmed, terminated contracts, and restricted purchases for 10 years. It has also expanded disclosure of the process, including by allowing seller-applicants to check progress online at each stage. It changed the review method for deciding whether to purchase properties in March this year. LH shifted from a voting system that decided only whether to “Pass” or “Exclude” to a quantitative evaluation system that assigns itemized scores for location, price and design, among other factors, enhancing the objectivity of reviews. The new registration system is a follow-up measure aimed at eliminating factors that could lead to misconduct from the earliest stages of the program.
LH is moving to strengthen transparency in its purchase-lease program because the number of newly built homes acquired under the program is growing rapidly. According to the Ministry of Land, Infrastructure and Transport, agreements were signed last year for 53,771 newly built purchase-lease homes nationwide, about six times the 9,253 recorded in 2023. In the September 7 Housing Supply Expansion Plan, the government set a target of beginning construction on 70,000 newly built purchase-lease homes in the Capital Metropolitan Area in 2026–2027. The harm caused by broker involvement has also been demonstrated in court rulings. A former executive in charge of purchase-lease work at LH’s Incheon Regional Headquarters was sentenced to eight years in prison in both the first and second trials on charges of receiving money and valuables from a broker and handing over internal appraisal materials classified as Security Level 1 on 16 occasions between 2019 and 2021. He appealed the ruling to the Supreme Court. The broker was found to have connected construction companies seeking to sell unsold homes to LH and to have received or been promised commissions worth about 9.9 billion won on 29 occasions.
“Through the implementation of this system, we will thoroughly block illegal brokers and outside solicitation that may arise in the purchase-lease program, and create an environment where seller-applicants can participate in the purchase process legitimately and fairly, without illegal inducements or harm,” said Yu Byeong-yong, head of LH’s Housing Welfare Headquarters. “We will continue to strengthen transparent administration to advance a public housing acquisition program that earns the public’s trust.”

[email protected] Jeong Gyeong-su Reporter