A group campaigning for the reform of money laundering and other accountability laws claims that billions of pounds worth of investment – “much of it driven by overseas corruption” – is flowing into the high-end London property market.
The group Transparency International has published a new report called Faulty Towers: Understanding the impact of overseas corruption on the London property market.
It looks in detail at 14 new landmark London developments, worth at least £1.6 billion and claims around 40 per cent of the homes in these schemes have been sold “to investors from high corruption risk countries or those hiding behind anonymous companies” with less than a quarter of the units purchased by people based in the UK.
Specifically the group claims that over 40 per cent of apartments in a tower on the Southbank Place development, next to the London Eye, have been bought by companies registered in the British Virgin Islands. Meanwhile 60 per cent of the new homes in one of the blocks of the Westminster Quarter development have been bought by investors from high corruption risk countries, compared to just over 10 per cent bought by UK buyers.
The group adds that there is evidence to suggest that many of these homes are rarely used.
“In Westminster where around 10 per cent of homes are owned by anonymous companies, over 5 per cent of properties showed an abnormally low level of electricity use, whilst other boroughs with high numbers of anonymously owned property follow a similar trend” the report claims.
“While Londoners find themselves priced out of the capital, many new homes are left unused by wealthy investors based overseas. Londoners aren’t the only ones losing out: demand for London property is fuelled by the corruption that robs public services of vital funds all around the world” according to Duncan Hames, director of Transparency International UK.
He says earlier research by his group discovered that at least 40,000 London properties were bought using anonymous companies, registered in countries which did not publish company ownership data.
“Successive governments have come to realise that London is treated as a safe haven for corrupt money from overseas. We now need to prevent laundered money and crisis capital from distorting London’s property market” Hames says.
He wants more use by the government of Unexplained Wealth Orders – a new investigatory power contained in the Criminal Finances – to show the authorities mean business.
Transparency International also wants a public register of the beneficial owners of overseas companies owning property in the UK, and reform of the Anti Money Laundering system “to strengthen the defences against illicit wealth entering the property market.”