36,342 properties in London — covering 2.25 square miles — are held by offshore tax haven companies, according to research from Transparency International (TI). Nearly a tenth of properties in Westminster are owned by companies registered in secretive jurisdictions, which raises questions about who really owns them and where the money came from.
High prices in the London luxury property market are attractive for ill-gotten gains — cash can be 'parked' in a Mayfair apartment and then moved elsewhere with little risk of losing value. A booming market is actually useful for money laundering, says TI; the higher the price, the more money can be legitimised that way.
Of those 36,342 properties owned by companies in secrecy jurisdictions, 9.3% are in Westminster and 7.3% are in Kensington and Chelsea. The by-now-legendary Vanity Fair article on One Hyde Park noted that 59 of the 76 apartments sold at the time were held by companies registered in offshore tax havens. That doesn't mean all of them were bought with dodgy money, but it does mean we have no way of knowing for sure.
Money laundering is when the funds from illegal activities are funnelled into legitimate looking corporate structures, usually in domains that let companies be run without disclosing who's really behind them. Not all companies incorporated in places like the British Virgin Islands or Jersey are for criminal purposes — hey, some are 'just' for good ol' tax avoidance — but the misuse of these kinds of companies is extremely common because of the ease with which they can bypass anti-money laundering checks when investing here. So we should be highly suspicious that so much London property is owned by mysterious figures, particularly when corrupt and illegal activities help perpetuate global poverty.
The effect of corrupt money on London's property is to help raise prices, which can affect prices further down the market in a ripple effect, and encourages developers to build more of these luxury pads for investment rather than concentrating on the homes London genuinely needs. To combat this — and to make sure London isn't a haven for the results of corruption — Transparency International recommends that any foreign company intending to hold a property title in the UK should be held to the same standards of transparency required of UK registered companies. Sounds simple enough. Let's see if it happens.
