Luxurious townhomes overlook Regents Park in London, UK, on Friday 29 November 2019. UK house prices rose at their fastest pace in more than a year in November, according to the Nationwide Building Society.
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The mayor of London has called for a register of overseas property holdings in an attempt to crack down on money laundering as threats of Russian sanctions intensify.
Sadiq Khan said the lack of transparency over property ownership in the UK allowed allies of Russian President Vladimir Putin to protect billions of pounds in unannounced amounts in the capital and across the country.
The government planned to have a register operational in 2021. But five years after work on the proposals began, Khan said there was still no meaningful legislation in place.
“The slow progress on this issue has been bitterly disappointing – and it will prevent the government from acting on their tough talk of further sanctions if imposed on Putin’s regime,” Khan said.
The mayor noted that the opacity of the current system could contribute to offenses such as tax evasion and money laundering, as well as hiding the assets of those targeted by financial sanctions.
It comes as the British government threatens harsh sanctions if Russia invades Ukraine, with Foreign Minister Liz Truss warning that oligarchs with links to the Kremlin would have “nowhere to hide”.
Yet a recent report by cross-party MPs found that Britain’s law enforcement regime is not “up to the job” of preventing fraud and money laundering seeping into its financial system.
Swelling of foreign property ownership
The amount of illegal and black money invested in the UK is notoriously difficult to track.
Khan said that although the government was aware of some properties owned by Putin’s allies, the current system means it is unclear who owns thousands of others. A register would make it easier to track property owners, who can often be kept discreet through holding companies.
“For far too long, ministers have turned a blind eye to the use of our capital as a safe haven for corrupt funds, which has a negative impact on both our international reputation for transparency and our local housing market,” Khan said.
Currently, almost 250,000 properties in England and Wales are registered with overseas buyers – up from fewer than 88,000 in 2010 – with London accounting for almost a third.
Many such properties stand empty at a time when the British are struggling to get on the property ladder amid rising property prices and unaffordable rents.
“The truth is that properties in London play a key role in housing illegal funds from around the world, which also results in many properties being left empty and unused at a time when many Londoners are struggling to afford a home to buy. or rent. ” Khan added.