Unfathomable perception

The real estate package that the government suddenly announced on Monday and immediately put into effect without even consulting with the ruling party has come under strong protest.

The unprecedented measures included an outright ban on new loans for purchases of residential property valued at more than 1.5 billion won ($1.3 million) and a heavy tax on homeowners. They did not just baffle the market, but also enraged it.

Those who planned for a dream home were suddenly rejected by banks. Retirees are worried about how they can afford a new tax bill. Online real estate communities brimmed with angry outbursts calling the government a “thief” for giving them taxes under the pretext of stabilizing home prices and “discriminating” against new entrants to neighborhoods in Gangnam District, southern Seoul.

The 18th set of real estate measures under the Moon Jae-in administration were all regulatory and repressive without addressing any of the supply shortage that is the real culprit behind the latest upward spiral in housing prices in Seoul. Some have even called it a state-controlled socialist policy that goes against the constitution. In fact, a suit has already been filed at the Constitutional Court. Chung Hee-chan, a lawyer who filed the suit, was denied money from banks due to the toughened regulation on mortgage-backed loans. He argued that the measure undermined the basic principle of democracy that require legal compliances to any restriction to individual property rights. If the means of real estate regulation are wrong, they cause serious impairment to the higher values, he said. He argued that the government has violated Article 23 of the Constitution, which stipulates that any restrictions to individual property rights for public purpose must be based on “laws.”

He was joined by Lee Seok-yeon, a lawyer who used to head the Ministry of Government Legislation. Lee claimed that the latest measures cannot be pardoned as they jeopardize the basic framework of free economy. Article 37 of the Constitution touches on “excessive” interventions to basic freedoms and rights. It stipulates that any restriction to civilian rights must have “just” cause, “appropriate” methods and ensure “minimum” damages to individuals and “balance.” The government may argue “just” cause of calming the housing market in the measures, but they have not been thoroughly studied or given a grace period to prepare for the changes. All other principles — the protection to legitimate wealth — have been ignored. Therefore, it is an outright socialist action that can shake the free market foundation of the country, he argued.

The government must explain the reasons why it has restricted civilian property rights and private banking business.

JoongAng Ilbo, Dec. 19, Page 34