It’s time to sort the wheat from the chaff when it comes to overseas buyers of property.
If you listen to Theresa May you’d think that by getting foreign purchasers to pay a stamp duty surcharge you would (hey presto!) solve the UK’s homelessness problem.
A few days after May’s comments, some joint research from Channel 4 News and the Bureau of Investigative Journalism revealed for the first time a hard and fast figure for the number of homeless who had died in the UK in the past year.
It was a shocking 449, many of them quite literally dying on our streets: we didn’t hear any comment about the scandal of homelessness from Theresa May when that story broke. Her interest in the issue appears to have waned since she survived the Tory conference.
So what are we to make of her overseas buyer stamp duty? The surcharge will of course further bolster Treasury coffers but nowhere near enough to ‘solve’ homelessness.
Instead, my fear is that this gesture will put up another small ‘UK not open for business’ sign, another decibel or two on Boris Johnson’s “F*** business” mood music that so many of May’s leadership rivals have been happy to play recently.
And as for the current London housing market, there are obvious dangers in discouraging foreign buyers: look no further than Foxtons as evidence of the capital’s challenges.
But whilst this latest surcharge looks like a bone for Brexiteers (with our industry suffering as a consequence) let’s look at a more genuine problem with overseas ownership.
And this is one that government could help remove rapidly, simultaneously reducing overseas ownership and improving the UK’s standing in the global community.
I mean, of course, that the government could clamp down on the dubious practice of overseas company ownership of property the so-called ‘dirty money’ which casts a stain over many aspects of the high-end agency and residential development sectors in London.
Earlier this year it was revealed that 50,000 properties in London were held by firms registered abroad, worth £33.9 billion according to the BBC/Land Registry research. In Kensington & Chelsea alone there are 6,000 such properties.
Now we can play coy if we want to, but in reality we know the issues behind the figures.
The National Crime Agency has estimated that £90 billion of criminal funds are laundered through the UK each year, with the London property sector a likely means.
Many of the properties already identified by the BBC are owned by companies in the British Virgin Islands, a Caribbean cluster with 31,000 residents who own 23,000 UK properties: oh yes, there’s concern over the BVI’s tax transparency, too.
That reflects badly on the UK and London far more badly than some foreign investor buying a flat in Canary Wharf and now being targeted by the stamp duty surcharge.
This dirty money problem is not confined to the capital. That BBC analysis found that in the south east there were £7.2 billion of properties owned by firms registered abroad; the West Midlands and North West have £3.1 billion apiece.
Some legislation is on its way: a draft Bill published by government says overseas companies will have to reveal their true beneficial owners and the first Unexplained Wealth Order, obliging someone to reveal their source of wealth, has already been served.
These are steps in the right direction, and let’s hope there are resources at Companies House and elsewhere to identify suspicious ownership on a far wider scale. If that could happen it would both improve British prestige and free some homes for other buyers.
In the meantime, though, let’s not pretend the biggest problem is the relatively modest number of wealthy families who are completely legally buying homes in pockets of London.
Such wealthy families may have little need for our sympathy, but let’s not pretend that forcing them to pay extra stamp duty does anything to solve our housing crisis – or to make us look open for business just when we could easily appear inward and isolated.
Source – EA Today – Click here for article