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The Guardian view on offshore secrecy: transparency is welcome, but it’s not a housing policy The Guardian view on offshore secrecy: transparency is welcome, but it’s not a housing policy
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Two and a half years ago, this newspaper published a series of special investigations into who was feeding London’s property bubble – and how they did it. The results were rather at odds with the usual property porn. Sure, there were stories on luxury flats in Mayfair. But the real star of the show was one office block in the British Virgin Islands, housing hundreds of sham companies with sham directors. Or perhaps it was the Land Registry and Companies House, with their records full of fake names and phoney directors. Then again, there were all those stories of Russian billionaires, some on the run from the law, all piling into property in London and the south-east. More than just good anecdotes, these were big money and massive tax dodges. In 2011 alone, more than £7bn of offshore money was poured into Britain’s flats, houses and office blocks. Of that, more than half – £3.8bn – of the transactions used entities registered in the British Virgin Islands. Needless to say, most of the money landed up in just a few square miles in the centre of the capital. Combing through Land Registry records, estate agents Knight Frank calculated that in the year to June 2013 overseas residents bought 49% of all newly built property in the plushest parts of central London.Two and a half years ago, this newspaper published a series of special investigations into who was feeding London’s property bubble – and how they did it. The results were rather at odds with the usual property porn. Sure, there were stories on luxury flats in Mayfair. But the real star of the show was one office block in the British Virgin Islands, housing hundreds of sham companies with sham directors. Or perhaps it was the Land Registry and Companies House, with their records full of fake names and phoney directors. Then again, there were all those stories of Russian billionaires, some on the run from the law, all piling into property in London and the south-east. More than just good anecdotes, these were big money and massive tax dodges. In 2011 alone, more than £7bn of offshore money was poured into Britain’s flats, houses and office blocks. Of that, more than half – £3.8bn – of the transactions used entities registered in the British Virgin Islands. Needless to say, most of the money landed up in just a few square miles in the centre of the capital. Combing through Land Registry records, estate agents Knight Frank calculated that in the year to June 2013 overseas residents bought 49% of all newly built property in the plushest parts of central London.
Related: Bankers, lawyers and other professionals abetting corrupt money in UK property | Letters
This dirty money-go-round is what David Cameron promised to stop today – and for that he deserves a big round of applause. So too does his pledge of a truthful property register – in which the owners of Britain’s land and homes are actually named. It should also be recognised that the Conservative government has gone further on this issue than Tony Blair or Gordon Brown managed in their 13 years in power, and post-9/11 attempts at cracking down on money-laundering. Labour had plenty of opportunity to take this step. In 2001, a Treasury official named Andrew Edwards warned that the Land Registry was open to criminal abuse. “If public policy emphasises privacy above transparency, the greatest beneficiaries are likely to be criminals,” the Edwards report said. It might be pointed out too that the last prime minister who refused to do something about this abuse was one David Cameron, whose government reacted to the Guardian’s 2012 expose and that year’s G8 tax, trade and transparency summit with this statement: “The UK encourages foreign investment and has no plans to stop overseas companies from registering as owners of property with the Land Registry.”This dirty money-go-round is what David Cameron promised to stop today – and for that he deserves a big round of applause. So too does his pledge of a truthful property register – in which the owners of Britain’s land and homes are actually named. It should also be recognised that the Conservative government has gone further on this issue than Tony Blair or Gordon Brown managed in their 13 years in power, and post-9/11 attempts at cracking down on money-laundering. Labour had plenty of opportunity to take this step. In 2001, a Treasury official named Andrew Edwards warned that the Land Registry was open to criminal abuse. “If public policy emphasises privacy above transparency, the greatest beneficiaries are likely to be criminals,” the Edwards report said. It might be pointed out too that the last prime minister who refused to do something about this abuse was one David Cameron, whose government reacted to the Guardian’s 2012 expose and that year’s G8 tax, trade and transparency summit with this statement: “The UK encourages foreign investment and has no plans to stop overseas companies from registering as owners of property with the Land Registry.”
However halting, any small step towards tax transparency is to be welcomed. But let’s not kid ourselves that a property register alone will rescue London from its inglorious status of being the global capital of light-touch regulation. Even to start on that goal, the government should make compulsory disclosure in the official records of who truly owns UK companies – no more fake names. And while opening up the property market to a little more transparency is a good thing, it will not achieve Mr Cameron’s goal of alleviating Britain’s property crisis. The way to do that is to build more houses, especially in the south-east – starting with more social housing. Instead, government policy is to force housing associations to sell their stock at a steep discount. Finally, politicians need to recognise that the dirty money pumping up our property bubble is not some aberration, but a product of London’s status as the no-questions-asked financial jurisdiction of the developed world.However halting, any small step towards tax transparency is to be welcomed. But let’s not kid ourselves that a property register alone will rescue London from its inglorious status of being the global capital of light-touch regulation. Even to start on that goal, the government should make compulsory disclosure in the official records of who truly owns UK companies – no more fake names. And while opening up the property market to a little more transparency is a good thing, it will not achieve Mr Cameron’s goal of alleviating Britain’s property crisis. The way to do that is to build more houses, especially in the south-east – starting with more social housing. Instead, government policy is to force housing associations to sell their stock at a steep discount. Finally, politicians need to recognise that the dirty money pumping up our property bubble is not some aberration, but a product of London’s status as the no-questions-asked financial jurisdiction of the developed world.