London mayor Boris Johnson has called for a huge tax rise to stop foreigners using the London housing market to launder money.
His call comes one year after three estate agents were fined almost £250,000 between them for administrative breaches of money laundering requirements.
This is how Eye reported it then
Johnson was speaking after a new report yesterday by anti-corruption campaign Transparency International said that in London alone, over 40,000 homes are owned by foreign companies, of which 90% (36,342) are based in offshore tax havens.
These include 38% in the British Virgin Islands, 16% in Jersey, 9.5% in the Isle of Man, 9% in Guernsey and 4% in Panama.
Johnson said: “I’m sure in many cases you’re looking at dirty money of one kind or another.
“You’re certainly right to think that you’ve got loads and loads of international despots and criminal rings who are using phoney companies to buy real estate as a way of getting security.
“Many of these people are simply paying that tax rather than revealing their identity.
“Well, if they want to pay for the luxury of anonymity, let them pay through the nose. Whack it up.”
The report is called ‘Corruption on your doorstep – How corrupt capital is used to buy property in the UK’.
Transparency International says it based its findings on Land Registry data, and one tenth of all properties in just one borough, Westminster, are owned by foreign-registered companies.
Dr Robert Barrington, executive director, said: “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 secretive off-shore companies.”
He said the UK has “sleepwalked” into becoming one of the most desirable destinations for corrupt capital in the world.
Scotland Yard says that over the last decade, 144 property deals worth a total of £180m were put under criminal investigation for alleged corruption.
Scotland Yard said these were the tip of the iceberg.
Chief Inspector Jonathan Benton, head of operations at the Met’s proceeds of corruption unit, said: “In nearly all the grand corruption cases we investigate, we find what we suspect is proceeds of corruption being used to purchase high-value properties.
“Properties that are purchased with illicit money, which is often stolen from some of the poorest people in the world, are nearly always layered through offshore structures.”
However, the issue – highlighted in a story on Eye yesterday – has caused controversy and an extraordinarily high degree of rhetoric.
Buying agent and property market pundit Henry Pryor said on Twitter that the story had as many holes in it as a Tetley tea bag.
Naomi Heaton, chief executive of property buying fund London Central Portfolio, accused Transparency International of “lies, damned lies” and an illustration of “how sick our society has become”.
She said: “The desire to create scapegoats, dissension, envy and hatred seems to have no limits.
“Where are the old fashioned values of rational thought and proven assumptions? It is so much simpler nowadays to make a controversial assertion – you do not even need to back it up. Pretty similar to the way the election campaigns are being run at the moment.
“Lots of brouhaha but not a manifesto in sight.
“So let’s look at this report. It claims that 36,342 properties in London are owned by off-shore companies and we have to assume, although it is not at all clear, Transparency International has gone through every Land Registry entry to get to this figure.
“But even if we give them the benefit of the doubt, there are 3.3 million households in London, so this stat amounts to just over 1%. Hardly world shattering!
“Having identifying these 36,000 properties held in foreign owned companies, Transparency International has decided to tar everything with the same black stained, evil brush.
“They indulge, without shame, in emotive language, describing these companies as ‘off-shore corporate secrecy’ and ‘off-shore havens’, thereby suggesting all sorts of skulduggery, whilst they may quite simply be a company in foreign ownership.
“Transparency International then notches the story up another peg by saying that the UK property market is a ‘safe haven for corrupt capital, stolen from around the world’ and that the ‘UK is becoming a destination of choice for global corruption’.
“Where is the evidence?
“The many innocent people who hold property through off-shore companies, quite legitimately, and who run their affairs transparently and accordance with the UK tax legislation, may well have something to say about that. So may the pension funds and insurance companies.
“No one is suggesting that there are not corrupt people around the world who are laundering their ill-gotten gains but, as a society, we have reached rock bottom when we dump everyone into the same boat.”