Money laundering skews Westminster property market


As a councillor in Westminster one of my jobs was to help people through the process of getting housed by the city council. 

One of the people I helped has since come back to me for assistance in purchasing their property under Right to Buy (RTB), and while I am no longer a councillor, I thought I’d take a look. 

What struck me was the valuation of the property, a staggering £500,000 for a 20 to 25 square metres bedsit. 

Well, that’s not surprising given that some of the developments nearby, like on Chiltern Street, are being sold for several million pounds for a two-bedroom flat!

It just goes to show how ordinary Londoners have been completely priced out of the housing market in the capital.  

Don’t take my word for it, we have had none other than Donald Toon, director of economic crime at the National Crime Agency, saying: “I believe the London property market has been skewed by laundered money. 

“Prices are being artificially driven up by overseas criminals who want to sequester their assets here in the UK.”

Nowhere else has seen more skewing of the housing market than the City of Westminster, where a huge percentage of the UK properties bought by companies in off-shore tax havens are concentrated – with as many as one in 10 properties in the borough. 

More recently some 6,527 properties, in places like Pimlico, the West End and Edgware Road, were purchased by off-shore companies between 2010 and 2015. 

Dolphin Square in Pimlico has the highest concentration of off-shore companies buying up properties, followed by those in the West End. 

We’ve had children of the prime minister of Pakistan, Nawaz Sharif, buying up Park Lane and ex-prime minister of Iraq, Ayad Allawi, buying up properties along Edgware Road. 

Incredibly, similar off-shore companies have also started buying up ex-RTBs on our council estates, like Cooper House in Church Street ward. 

Now surely not all off-shore companies can be seen in this light, but you have to stand up and listen when a Transparency International report of last year, “Corruption on your Doorstep: How corrupt capital is used to buy property in the UK”, suggests that £180million of property in the UK has been brought under criminal investigation as the suspected proceeds of corruption since 2004.  

This is believed to be only the tip of an iceberg of the scale of the proceeds of corruption invested in UK property. 

Furthermore, more than 75 of the properties under criminal investigation use off-shore corporate secrecy.

Interestingly, while the so-called Panama Papers have kicked off the interest in these off-shore companies, most are not registered in Panama but in British Overseas Territories & Crown Dependencies like British Virgin Islands, Guernsey, Isle of Man and Jersey, suggesting where we will have to act on the issue globally.

So what’s the Mayor of London got to say for himself? After all, much of this has happened in his time at City Hall. 

At first he was in denial, before he acknowledged the extent of the problem last year in an exchange with me at Mayor’s Question Time.  

More recently he’s not been keen to support some of the changes proposed to deal with the problem, backtracking on his position a year ago. 

So Boris Johnson has let London become the world’s money-laundering capital and not acted to stop allowing the super-rich to use off-shore companies to buy property. Money laundered through London’s property market leads to hyper-inflation in housing prices for ordinary Londoners.

While he may not have had the powers to deal with it, he certainly could have been an advocate of reforms to the housing market, such as making it a responsibility of estate agents to check buyers as much as sellers in any property transaction. 

Given the influence of ill-gotten gains on prices, let’s certainly hope the next Mayor of London intends to advocate for these reforms and much more.

This was published as a Forum piece in the West End Extra in the week beginning the 27th of April 2016. 


Leave a Reply

Your email address will not be published. Required fields are marked *