Mayor of London demands greater transparency amid fears some money is laundered.
Mayor Sadiq Khan is to launch a far-reaching inquiry into foreign investment in London property, according to a report. House prices and rents have soared in the city over the past few years, driven up by a shortage of supply and intense demand from investors and homebuyers.
London property is seen as a safe haven for foreign money, which pours in by the billion, particularly to prime central areas. Much of it is legitimate, and an important source of funding for development work, but a sizeable chunk is also the laundered proceeds of corruption.
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“It’s clear we need to better understand the different roles that overseas money plays in London’s housing market, the scale of what’s going on, and what action we can take to support development and help Londoners find a home,” Khan told the Guardian.
“That’s why we are commissioning the most thorough research on this matter ever undertaken in Britain – the biggest look of its kind at this issue – so we can figure out exactly what can be done.”
Khan also said there needs to be greater transparency over who owns property in London. Often, purchases are made through offshore shell companies, masking the real owner.
The mayor said Londoners “need reassuring that dirty money isn’t flooding into our property market, and ministers must now make all property ownership in London transparent so we can see exactly who owns what.”
The government has targeted investors in property with a number of tax hikes. Stamp duty is higher for more expensive and additional properties. Homes owned by offshore companies are also subject to an annual levy, and foreign investors must now pay capital gains tax on their property profits.
While the tax increases have cooled demand in London’s property market, compounded by Brexit uncertainty, the weakness of sterling against the dollar is thought to be attracting more potential buyers from overseas, particularly China. When sterling collapsed in the financial crisis, the London property market boomed as foreign cash poured in.