[Legiscope] Construction and Real Estate Industry Risk Index Ranks 1st Across All Sectors... 3rd Attempt at Bill to Establish a Supervisory Agency

The risk index for the construction industry stands at 12.9, ranking 1st across all industries — and now there is an attempt to add a dedicated supervisory agency on top of this. Two bills to establish a Real Estate Supervisory Service were proposed in the 22nd National Assembly just two days apart. Representative Kim Hyun-jung's bill includes the joint signatures of 47 lawmakers, more than four times the number of signatures compared to the same initiative that was discarded in 2020 (Representative Yang Kyung-sook, 10 lawmakers). A bill has returned that seeks to create an agency to enforce regulations in an industry that already has the highest accumulation of regulatory bills.

Transplanting the Financial Supervisory Service Model to Real Estate

The current real estate supervisory system is a decentralized structure in which functions are divided among the Ministry of Land, Infrastructure and Transport, the Financial Services Commission, and local governments. Reporting on apartment transactions is under the jurisdiction of local governments, real estate funds and REITs are handled by the Financial Services Commission, and the crackdown on real estate agents is again overseen by local governments. Even if abnormal transactions are detected, information sharing and response speeds between agencies are inevitably slow.

The Real Estate Supervisory Service bill proposes consolidating this decentralized structure into a single supervisory agency. Just as the Financial Supervisory Service uniformly monitors banks, insurance, and securities, this is a model where a single institution constantly tracks real estate transactions, brokerage, development, and finance. The nationwide plunge in housing prices and large-scale jeonse fraud incidents in 2022-2023 broadened the political consensus that "the current decentralized supervisory system is insufficient," and that energy has been concentrated in this proposal.

Expectations from Tenants, Burden on the Construction Industry

From the perspective of tenants and general consumers, the expectations are clear. If a dedicated agency is established, the response speed to illegal acts by real estate agents, inflated presale prices, and abnormal transactions in areas concentrated with gap investments will accelerate. In particular, damage types that cross the boundaries of finance and real estate, such as jeonse fraud, can be tracked much more effectively by a single supervisory agency.

From the perspective of the construction and real estate industries, the expansion of regulatory burdens is a realistic concern. Based on Legiscope data, out of a total of 1,748 bills related to the construction industry, 147 are regulatory bills (8.4%), and its risk index is 12.9, ranking at the very top among all industries. The real estate industry also records 31 regulatory bills out of a total of 1,292 (2.4%), with a risk index of 5.0. If a supervisory agency is newly established, bills that are not currently classified as regulations could potentially function as practical regulations depending on the scope of the new agency's authority.

The Signal Sent by 47 Joint Signatures

For 47 out of 300 incumbent lawmakers to sign a single bill represents a scale that is impossible without internal support from parliamentary negotiating blocs. The scheduling of a standing committee public hearing will serve as the first visible signal of practical legislative momentum.

If the Financial Supervisory Service model is followed, the core elements will be inspection rights, sanctioning power, and the authority to impose penalty surcharges. Depending on the scope of these provisions, the impact on the brokerage, development and construction, and real estate asset management industries will vary respectively. In the past 60 days alone, 36 bills related to real estate, housing, and construction have been proposed. If the Real Estate Supervisory Service is established, these 36 bills will fall under the authority of the new agency. A scenario where a dedicated supervisory agency is added to the industry with the highest risk index across all sectors — the shift from 10 signatures to 47 signifies this possibility.

This article was written based on Legiscope, a legislative tracking engine built by News Epoch.