Fines loom for fake move-ins as ruling bloc pushes owner-occupancy reporting rule for Gangnam, Yongsan

The ruling party and government are moving ahead with a plan to require homeowners who defer their owner-occupancy obligation on apartments subject to the price ceiling on new apartments in the Greater Seoul area to report the deferral to local authorities — and to impose fines on those who fail to do so. The measure aims to curb fraudulent practices such as fake move-ins, where buyers register their address at a new apartment while renting it out on a jeonse or monthly rent contract, using tenants' deposits to cover the purchase balance.

Ten lawmakers from the Democratic Party of Korea introduced an amendment to the Housing Act on Saturday, according to the National Assembly's legislative information system. The bill would require anyone subject to an owner-occupancy obligation in a price-ceiling zone who wishes to defer residency — for up to three years — to notify the relevant city mayor, county chief or district mayor. Violations would carry a fine of up to 3 million won ($2,240).

Under current rules, apartments in areas subject to the price ceiling on new apartments — including the three Gangnam districts of Gangnam-gu, Seocho-gu and Songpa-gu, as well as Yongsan-gu — are in principle subject to an owner-occupancy requirement for a set period beginning from the earliest possible move-in date. For publicly developed housing, the requirement is five years if the pre-sale price is below 80 percent of the nearby market price, and three years if it falls between 80 and 100 percent. For privately developed housing, the periods are three years and two years, respectively.

The requirement was introduced to curb speculation — specifically, the practice of buying an apartment at a below-market pre-sale price, immediately putting it on the jeonse market to cover the remaining balance, and then pocketing the price difference once values rise. This so-called "lottery subscription" combined with gap investment had been a target of the policy.

The rule drew criticism as a de facto ban on jeonse and monthly rent listings, and the National Assembly passed a compromise in 2024 allowing owners to defer move-in for up to three years from the earliest eligible date. Owners who cannot move in immediately are thus permitted to rent out the unit for a period.

But the three-year window, left largely unmonitored, gave rise to cases of fake move-ins — where owners simply transferred their registered address without actually living in the unit. In response, the Ministry of Land, Infrastructure and Transport announced in August that it would make deferral reporting mandatory. The latest bill is believed to follow from that government plan.

A spokesperson for the office of Democratic Party lawmaker Lee Yong-seon said the current deferral system has no separate reporting requirement, making it difficult to determine whether an owner-occupancy obligation has actually been met when someone registers their address without residing there. "If a violation goes undetected, there is a very high risk that the deferral system will be exploited as a loophole — allowing people to satisfy the residency requirement on paper without ever actually living in the unit," the spokesperson said.

Compliance investigations are also set to be strengthened. The Ministry of Land, Infrastructure and Transport earlier announced plans to conduct on-site visits to the relevant apartments and to draw on telecommunications and credit card usage data, television subscription records and building management office files to improve the effectiveness of field inspections.

Under the proposal, the land minister and local government heads would each be assigned specific categories of housing to investigate, with at least one inspection required during the owner-occupancy period. The precise scope of data that may be obtained for such investigations would be set by presidential decree. The ministry's investigative functions could also be delegated to the Korea Land and Housing Corporation or local public corporations.