Labour’s mayoral candidate Sadiq Khan has called on the government to make all property ownership in London transparent.
The MP for Tooting has demanded ministers put an end to individuals using anonymous off-shore tax havens to buy up houses and land.
The call will draw attention to the property deals involving his Conservative rival, Zac Goldsmith. The MP for Richmond’s family trust has used offshore vehicles to own properties.
Khan told The Guardian: “I’m deeply concerned about reports of dirty money flooding into London’s property market and it’s high time the government made all property ownership in London transparent so we can see exactly who owns what. What have those using anonymous off shore tax havens got to hide?”
Off-shore companies, primarily based in tax “safe havens” such as the Cayman Islands, can purchase property in London without having to disclose their owners.
This allows owners to remain anonymous, giving cover to money coming from illegal sources – leading to concerns of London property being used for money laundering. Recent estimates suggest there are 36,300 properties in London registered to off-shore companies.
The total value of the properties is estimated to be £122bn but it could be much higher as, due to a loophole in the law, many transactions are not recorded by the Land Registry.
Khan is calling on the government to change the law and clamp down on money laundering to: ensure all foreign companies are as transparent as UK companies over their ultimate beneficial ownership (ie the names of the individual owners) if they wish to hold property titles in the UK ensure that anti-money-laundering checks are also carried out by estate agents on the purchaser, not just the seller pursue those who break the rules and make sure they face proper punishment and sanctions In July 2015 David Cameron promised to clamp down on “dirty money” entering London’s property market on a visit to Singapore. But since then progress has stalled, with little mention by the government.
Khan said: “I’m worried London is becoming the go-to destination for the world’s dirty money and it’s being sunk into London’s property market. Londoners who are struggling to scrape together a deposit will be shocked that dirty money is flooding into the city, unchecked and anonymously, causing prices to rise even [more quickly].
“The prime minister went all the way to Singapore to say he was going to do something about this problem but since then he’s gone totally silent. It’s high time all property ownership in London was made transparent so that we can see exactly who owns what and put a stop to the city’s property being used for money laundering.”
A trust set up by Goldsmith’s late father, James, owned a £7m 543-acre Devon estate via a Cayman Islands company called Ranger Investments. It also owned a £7.7m home in Richmond bought in 2007 through a Cayman Islands-based company called Holmead Investments Ltd. Goldsmith had use of both homes.
The trust is “blind” which means that the MP has not made any decisions about property purchases. His current residence in Barnes, south-west London, is not owned by an offshore vehicle. There is no suggestion that he has used the ownership structure to avoid any charges himself and he says has always paid the duty on all of his UK properties in full.
Goldsmith is still under pressure to come clean about his former non-domiciled tax status despite releasing his tax returns last month. He has been asked to explain how much tax he avoided between 1997 and 2010 when he gave up his non-dom status.
Housing minister Brandon Lewis, said that Khan’s proposals would lead to fewer homes being built in London because investment would be “choked off”.
“Khan should stop his divisive gimmicks, designed only to score partisan points, and start explaining how he plans to fill the £1.9bn black hole in his spending plans,” he said.