Private Rental Developers Sanctioned by KFTC for Advertising "Nearly Closed" Despite 28-33% Recruitment Rates

Exaggerated advertising despite low recruitment rates
Corrective and publication orders imposed

Private rental apartment developers were sanctioned by the Korea Fair Trade Commission for concealing that they had not obtained approval for their housing construction project plans from the competent local governments and repeatedly running false ads that made it appear as though units were nearly sold out despite low recruitment rates.

The KFTC announced on October 26 that it had issued corrective orders and publication orders to four developers—Dream Housing Co., Ltd., Venezia, Haeseong Industrial Development, and AMD—for deceptive and false advertising while recruiting prospective tenants.

Beginning in November 2024, the developers recruited members through online forums, YouTube, banners, and other channels, deliberately omitting the fact that they had not obtained permits or approvals from the relevant authorities, a key prerequisite for apartment construction. In a typical apartment sale, buyers are recruited after the project plan is approved. In this case, however, the private rental apartment projects first recruited members, then formed cooperatives, and subsequently sought permits and approvals. Consumers were not given proper information about whether the necessary approvals had been obtained, leaving considerable room for them to mistakenly believe the projects were safe and had already received approval.

False ads that stoked consumers' sense of urgency were also uncovered, despite low actual recruitment rates. Dream Housing, Venezia, and Haeseong Industrial Development had recruited only 28.4% to 33.6% of their target membership as of the date they were caught, yet advertised that enrollment was "nearly closed" and urged consumers to sign contracts quickly. In particular, Dream Housing and its representative failed to comply with earlier measures, including corrective and publication orders imposed in February 2026, and were additionally referred for prosecution this time, facing serious consequences. Haeseong Industrial Development, however, was exempted from the notification order in consideration of the fact that it had obtained approval for its housing construction project plan before the deliberation date.

Meanwhile, the government has strengthened legal safeguards to prevent developers from recruiting members through loopholes. Under amendments to the Special Act on Private Rental Housing enacted on September 8, 2026, starting March 9, 2027, private developers will be completely prohibited from recruiting members at their discretion without obtaining permits or approvals from the relevant authorities. The KFTC said, "We will continue to monitor unfair advertising in real estate construction projects, including private rental apartment projects, that significantly affect people's daily lives, and will impose strict sanctions when violations are detected."

This content was produced with the assistance of AI translation services.