David Cameron is cracking down on corruption in the UK, and he’s starting with the property industry. “I want Britain to be the most open country in the world for investment,” he says. “But I want to ensure that all this money is clean money. There is no place for dirty money in Britain. Indeed, there should be no place for dirty money anywhere.”
Approximately £120 billion worth of property in England and Wales is owned by offshore companies, according to figures from campaign group Transparency International. That includes over 36,300 properties in London alone. In fact, one in ten properties in the City of Westminster are overseas-owned.
Investing in property is an easy way to move money from country to country, making it a popular cover, says a group spokesperson: “The corrupt are helped to buy properties by lawyers, accountants and estate agents who do not ask where the money is coming from – which by law in most countries, including the UK, they are supposed to do.”
As part of his mission to dispel corruption and chicanery from the UK property industry, Cameron proposes to make the Land Registry publish data on UK land and properties owned by foreign shell companies. But is this new crusade for transparency driven by a genuine desire to make the property sector more legitimate, or simply good PR?
The short answer; both.
“No one really knows how much of the offshore shells’ investment involves criminal money,” says The Economist. “It is likely to be only a very small percentage of the total.” However, holding offshore companies accountable for their property investments will no doubt endear Cameron to UK property investors.
“The change might also do something to stop the spiral of climbing property prices in London, which has forced middle-class Londoners further out from the centre of the city,” writes Patrick Wintour in the Guardian.
Credit where it’s due; with this latest decree, Cameron has done more on the issue of money-laundering than Tony Blair and Gordon Brown combined. Even if it is only the minority of foreign investment companies that are guilty of corruption, setting a precedent by taking them to task and implementing transparency as universal best practice will go a long way towards restoring the public’s trust in the private rental sector, which has been let down by shady investors and rogue agents in the past.
George Spencer is CEO at Rentify.