Wealthy Nigerians spending over £4million in London property market
In order to ‘strike the right balance between improving transparency and minimising burdens on legitimate commercial activity’ the UK Department for Business, Energy and Industrial strategy is asking overseas investors, property and transparency experts to submit evidence by May 15, 2017 as part of efforts to launch a public register of foreign property owners.
It is a known fact that foreign property buyers are using companies and other structures to buy real estate is to be created in the UK. The new register will be public and will include those who own or want to buy property in the UK. It will be easily accessible and avoid creating a disproportionate burden or put off legitimate investors.
One of the main aims is to prevent those buying property from hiding behind offshore corporate vehicles as they are regarded as vehicles for hiding illicit funds and laundering the proceeds of crime.There has been rising concern that the rise in overseas owners of property in London, for example, could be due to criminals using the real estate market.
Indeed, between 2004 and 2014, over £180 million worth of property in the UK has been investigated as suspected proceeds of corruption. In January 2016 the National Crime Agency reported the conviction of a money launderer who had used offshore companies to launder £12m stolen from Commerzbank through council properties in London.
‘The UK property market attracts a great deal of inward investment to the UK. This investment benefits the UK economy and supports the construction industry and a host of connected trades across the country. It is something that the UK government is committed to protecting. Therefore it is important to ensure the integrity and reputation of the UK property market,’ said Margot James, Minister for Small Businesses, Consumers and Corporate Responsibility.
‘The UK property market should be seen as fair, transparent and clean in order to attract the right investors and owners. Honest business should not fear that they are supporting criminal enterprise when investing in UK property. A higher level of transparency will boost investor confidence,’ she explained.
The consultation document says that the Government is concerned about the potential for illegal activity to take place through overseas companies investing in the property sector and explains that some properties are owned through offshore companies in order to obscure their true owners.
‘This can make it difficult for regulators, legitimate businesses and the general public to know who the true owners are and can make it very difficult for law enforcement agencies to carry out effective investigations. The use of offshore corporate vehicles to obscure the true owners of UK property has attracted those who wish to hide illicit funds and launder the proceeds of crime,’ it says.
‘The secrecy that these offshore companies provided made it difficult for investigators to identify who owned the properties. Greater transparency of property ownership will make the job of enforcement agencies easier and will discourage criminals and the corrupt from choosing the UK to hide or launder their money,’ the document adds.
Under the current proposals entities wishing to buy property will have to register their beneficial ownership information with Companies House. If their application is successful they will be allocated a registration number. This number will be required in order to register title to the property at the appropriate Land Registry.
Entities that already own property will be given a transitional year in which they will be free to choose whether to disclose the information and apply for a registration number or dispose of their property.
By Marc Philips with agency report