This week Mayor of London Sadiq Khan called for an overseas property register in a bid to root out money laundering into UK property.
The government is threatening tough sanctions on Russians owning UK assets should they invade Ukraine, but according to Khan the government’s failure to bring in a register makes it difficult to act on this tough talk.
Should a register be brought in – as was promised by the government in 2016 – Philip Turner, partner at Ashfords LLP, explored how it would look.
He said: “The proposed register of ultimate beneficial ownership of English and Welsh Property – it is likely that Scotland would want its own regime – could work in much the same way as the Companies House register works in that companies are required to notify Companies House of Persons with Significant Control.
“On making an application to register a company as registered proprietor the government could insist that the conveyancer also supply details of the ultimate beneficial owner of the shares in the company and therefore the property itself, this would be an inexpensive way of collecting the information for the government and should not impose an undue burden on the profession which is in any case required to collect this information as part of its Anti-money laundering due diligence.
“A different question is who has access to this information and for what purposes? Historically Land Registry has been interested in who owns the legal title and not who owns the underlying beneficial interest. Once government collect that information will they make it public? Will it be used only for anti-corruption or sanctions purposes or will I be able to find out who is behind the offshore company that owns the flat above mine so I can try to reach that person to plug a leak?
“And what about those purchasers who have a legitimate interest in confidentiality? Will they be put off from investing in prime central London property for this reason? Perhaps so and the stamp duty land tax revenues amongst other taxes including for example council tax could be much reduced as a result.
“As paraphrase the old adage’ to everything there is a price’.”
The number of overseas property owners in the UK – especially London – is an ongoing controversy.
Many properties are left empty and unused in the capital at a time when people are struggling to get on the housing ladder or even find somewhere affordable to rent.
Unsurprisingly therefore there is plenty of support from a register.
George Havenhand, senior legal researcher at Spotlight on Corruption, said: “A register of overseas owners of UK property would enable the transparency that is essential for tackling the flood of dirty money in the UK. It was promised in 2016, consulted on in 2017 and committed to again at the G7 last year.
“The government has highlighted the serious criminal risks associated with opaque property ownership – including money laundering and hiding the proceeds of crime – so its failure to find time to set up the register is increasingly difficult to understand.
“The time for prevarication is over: the register must be included as part of the Economic Crime Bill in the next Queen’s Speech.”