It’s beginning to look like the UK’s property market has ‘become a safe haven for corrupt capital stolen from around the world’. That’s the verdict of a report out today from the anti-corruption NGO Transparency International (TI), which found that 36,642 London properties, covering 2.25 square miles, are owned by hidden companies in secretive offshore havens such as The British Virgin Islands (BVI).
Police have investigated more than £180m worth of properties suspected to be the proceeds of corruption in the past decade, 75% of which were held by such companies. Of course we must be careful not to jump to conclusions here as some legitimate reasons for secrecy do exist – discretely minimising your tax liabilities isn’t illegal, even if it is frowned upon.
But the stats certainly beg the question as to just how rife money laundering is. A remarkable 9.3% of properties in the City of Westminster are owned by offshore companies in secretive locations, and 7.3% of those in Kensington and Chelsea. Companies in the BVI bought £3.8bn of UK property in 2011 alone. That’s a lot of houses.
‘There is growing evidence that the UK property market has become a safe haven for corrupt capital stolen from around the world, facilitated by the laws which allow UK property to be owned by secret offshore companies,' said Dr Robert Barrington, executive director of Transparency International UK.
‘This has a devastating effect on the countries from which the money has been stolen, and it’s hard to see how welcoming in the world’s corrupt elite is beneficial to communities in the UK. It is astonishing that the UK has sleep-walked into this situation, and the Government needs to act quickly to make sure that the UK does not become the destination of choice for global corruption.’
TI says it wants overseas companies which buy UK properties to submit to the same level of scrutiny as UK-registered businesses, and for estate agents to be forced to conduct due diligence checks on purchasers.
It also called on the Government to push British overseas territories to step up their anti-money laundering measures. But there are deep layers of secrecy involved in these deals, which combined with the less-than-enthusiastic attitudes of the havens themselves, means there's a long and jumbled road ahead.