They may not realise it, but criminal laundering is costing ordinary Londoners dearly
It’s one of those crimes which you’re unlikely ever to see or experience personally, but criminal money laundering is costing ordinary Londoners dearly.
A recent study by Transparency International found that over 36,000 London properties are held by companies operating in offshore tax havens. Owing to the secretive nature of these havens we know very little about the true owners of the properties or, just as importantly, where the money used to purchase them came from to begin with.
There are many legal, if morally questionable, tax perks to operating from an offshore tax haven. But for criminals, the ability to launder criminal cash is the big attraction. Yet in order to make it work they need to be dealing with big amounts, which is where high valued property comes in.
Evidence shows that the average price of a property under criminal investigation in the UK is £1.5m with some worth up to £9m. It’s clear that criminals are targeting the most expensive properties to harvest their ill-gotten gains.
The problem for everyday Londoners, other than the criminality, is the knock-on effect. Artificially inflated prices in central London ripple out across the capital, pushing up prices and making many homes unaffordable for average earners.
Yesterday the prime minister announced a toughening up of the rules around foreign purchases, by ordering the Land Registry to publish details of companies who own property. While this is a good first step, there is much further to go. The message needs to go out loud and clear from both the mayor and government that money laundering and financial crime will not be tolerated.
Those 36,000 properties amount to a total area of 2.25 square miles; that’s far bigger than the entire City of London financial district. In some areas, for example the City of Westminster, Transparency International found that almost one in ten properties were owned by companies registered in an offshore secrecy jurisdiction. In high value areas of the capital this is not a new phenomenon.
In the past we’ve raised concerns about money laundering, only to be dismissed and brushed off by Boris Johnson. When we asked him what he thought of the Transparency International report on money laundering he said it ‘asserted that it was ‘likely’ that that there was a link between ‘corrupt capital’, overseas investment and rising house prices but did not produce any evidence to suggest the nature and scale of any such relationship’.
The prime minister obviously disagrees, as it was this report which inspired his rule change.
Publishing details of foreign companies investing in property is a good start but we really need to see increased efforts to identify and prosecute offenders, as well as pressure put on estate agents to carry out more thorough checks when selling top-price homes.
Without these steps the sky-high prices illegal launderers can pay for London properties will continue to add artificial upwards pressure to the housing market, putting home ownership further and further out of reach for ordinary people.
It’s time the mayor converted to the cause, as the prime minister has eventually seen fit, and makes clear that money laundering simply will not be tolerated in the capital.
Tom Copley is a Labour Londonwide Assembly Member and the Labour Group Housing Spokesperson. Follow him on Twitter
4 Responses to “How corruption is pushing up house prices in London”
Yvonne Lunde-andreassen
Where do you imagine the billions of money made by ‘crime’ ‘( –people smuggling/sex trade/drugs) etc etc end up ? You can’t just walk into a bank with suitcases full of cash; The easiest place to invest it is in buildings.. ..Easy to work out how the system goes…..ain’t rocket science;
Anecdotal. example.. Large multi occupied blocks
;Buy out lease holders, demolish buildings; (or,’ persuade’ council to ‘decant’ tenants).
Replace with cheapo factory-made (lots of steel beams & glass) Sell ‘flash apartments;
Lottsa; LEGAL money ! … Gangsters are smart people, they have accountants etc etc
They can run rings round the sort of passive NVB governments we are prone to.
London has long been famous as europes money laundry
Check out the streets near you !;
RoyB
Only just noticed, Tom? London has been the world’s money launderer for many years now. The unregulated space that is the City is an open playground for crooks, including the bankers who facilitate the laundrering. Problem is, we as a nation are so dependent on a ready supply of bent money to top up the tax take that it will take years to clean up the system without impoverishing the State. Funny thing is, it’s much easier for a crook to buy overpriced property in London than it is for Joe Public to open a savings account at a Building Society – just try it if you don’t believe me. If you’ve got over £50m, you can just walk into the UK, no questions asked.
B. BHARATHI
Indian business people, politicians, looters invested a huge sum of money in england because england politicians promote it. In U.K. indian origin politicians are highly involved. they are indulging many illegal activities. Labour party should not support it.
Loopey Ange
I recently watched a documentary about this. There are laws in place now, and if an Estate Agent feels that a sale may be based on iloegal activity, it is an offence not to report it – it can carry a good few years behind bars.
Social cleansing of big Towns and Cities is happening everywhere now – it MUST be stopped.
A solution to this ‘could’ be a limit on properties, and in Cities, a home buyer should live in their properties for so many months of the year. I know it could be expensive to implement – but as is the case for unemployment, or disability fraud, where there’s a specific number one can report a claimant – how about a number where neighbours/residents can report long term empty properties?
People as far as China are infesting in Londons newest top apartments – will they be occupied? When we have so many homeless and families being financially squeezed out of areas they’ve spent their whole life – it’s about time we got tough on empty properties!