Billions of corrupt wealth ‘fuelling London housing crisis’

Billions of corrupt wealth ‘fuelling London housing crisis’

Corrupt money is thought to be pouring into London’s housing market and exacerbating the capital’s housing crisis, with more than £4.2bn worth of property bought using suspicious wealth.

The acquisition of luxury property by corrupt individuals is causing a ripple effect, driving up prices in the rest of the capital and pushing many Londoners out of the city, according to a report by London-based anti-corruption NGO Transparency International.

The organisation claims up to 80 per cent of properties in luxury developments are being snapped up by overseas investors, with 40 per cent sold to individuals from high corruption risk jurisdictions, or to companies based in secrecy havens.

Its findings are based on an analysis of Land Registry data for 14 landmark luxury developments, consisting of 2,066 future homes.

London property is seen as a safe haven by corrupt individuals from crisis-torn parts of the world, with ‘anonymous’ companies registered in the UK’s Overseas Territories and Crown Dependencies frequently used to purchase assets and avoid detection.

While there is a multitude of factors contributing to the housing crisis, including a lack of supply and strong domestic demand, Transparency International claims to have found evidence that overseas corruption is playing a ‘significant contributory role’.

The organisation is lobbying for greater transparency to help combat the problem, calling on the government to implement a public beneficial ownership register of overseas companies that own UK land titles originally announced after the May 2016 Global Anti-Corruption Summit.

It also recommends taking tougher action against money laundering and ensuring the UK remains committed to tackling corruption across the globe.

Daniel Bailey, principal at Derbyshire-based Middleton Finance, commented: “I haven’t had any experience of this, but it is certainly something the authorities have to clamp down on.

"It is potentially helping to fuel property prices, which only adds to the big issue of around housing and people being able to afford to buy property there is an adverse effect on people trying to buy.

“I think the government needs to clamp down. As advisers, we have to follow our due diligence and check where the funds are coming from. With mortgages as well, you have to check where the funds are coming from.

“A lot of people have been buying property with cash, which comes down to the estate agents doing the check but they are not regulated. It is an area that needs to be addressed, and maybe tightened.”