The president’s art of the property deal

Ahn Hai-ri

The author is an editorial writer at the JoongAng Ilbo 

High-ranking officials’ confirmation hearings and asset disclosures are often described as excellent investment textbooks, revealing both what they own and how they built their wealth. President Lee Jae Myung has now offered another lesson: How to navigate layers of real estate restrictions. In essence, how a buyer with only 300 million to 500 million won ($203,100 to $338,600) in cash could acquire the title to a 2.9 billion won apartment in Bundang District, Seongnam, Gyeonggi.

Seeking to curb soaring housing prices, the Lee administration introduced sweeping measures on Oct. 15 last year. All of Seoul and 12 areas in Gyeonggi, including Bundang, were designated land transaction permit zones and speculative overheating districts. Lending was tightened, gap investments involving tenants’ deposits were restricted and transfers of reconstruction association membership were barred after key approvals.

The theory was that reducing demand would force sellers to lower prices. Instead, prices climbed further and most metropolitan apartments became inaccessible to anyone without vast cash reserves. That helps explain the flood of public appeals to ease lending rules ahead of a national real estate debate scheduled for Thursday.

Yet Lee and first lady Kim Hye-kyung appear to have completed precisely the kind of transaction their policies were designed to prevent. On July 14, they signed a contract to sell their jointly owned 164-square-meter (1,765-square-foot) apartment in Yangji Village, Sunae-dong, for 2.9 billion won, slightly below an April transaction price of 3.03 billion won. Ownership was transferred two days later.

The unusual point is that the title changed hands before the balance was paid. Property records show that Lee and Kim registered a maximum secured claim of 1.77 billion won against the buyers. Because such claims are commonly set at 120 to 130 percent of the actual debt, the arrangement suggests that the presidential couple effectively financed about 1.3 billion to 1.4 billion won of the purchase themselves.

There is more. Lee’s 2025 and 2026 asset disclosures listed a tenant deposit of 1.13 billion won on the apartment. After subtracting that deposit and the seller-financed balance, the buyers may initially have needed only 300 million to 500 million won to obtain title to a high-priced home inside a permit zone.

The government, meanwhile, has capped mortgage lending on homes worth at least 2.5 billion won at 200 million won and sought to block cash-light gap investments. The president’s use of a registered mortgage to facilitate the sale therefore inevitably prompted accusations that he had found a workaround to his own rules.

As criticism mounted, the presidential office said on Monday that ownership was transferred first because of the buyers’ circumstances and that the balance would arrive around October. It did not explain those circumstances.

Real estate professionals suspect the timing was linked to reconstruction rights. Yangji Village is expected to receive a project operator designation notice later this month. Because the complex is in a speculative overheating district, anyone purchasing after that notice could lose eligibility for an apartment allocation and instead face cash liquidation. Completing registration beforehand may therefore have been essential for the buyers to inherit association membership.

The buyers’ identities remain unclear. What is clear is the resulting fairness controversy. Even owner-occupiers struggle to move into newly-purchased homes because of lending restrictions. Yet the president who imposed those rules appears to have stretched ordinary practice to help buyers secure valuable reconstruction rights, especially for well-connected purchasers, possibly for an investment-oriented move of the sort he has often criticized.

Lee’s supporters argue that only the buyers benefited and that the sellers accepted greater risk. Public suspicion, however, has grown so strong that some even wonder whether the mortgage serves as a safeguard allowing the property to be reclaimed later.

The explanation that the arrangement merely enabled a faster sale is unlikely to satisfy the public. Koreans are quick to learn and exploit any legal route that remains open. If similar seller-financing arrangements now spread, the government will have to explain whether they are legitimate exceptions or loopholes that must be closed.