Criminals funnelling dirty money into UK property are pushing up the price of an average house in London by £11,000, the Mail on Sunday can reveal.
Illicit cash flowing into the housing market has inflated the average property price in Britain by £3,000, according to data compiled by anti-money laundering experts SmartSearch.
It estimates that since 2016 more than £11 billion of suspicious money has flowed into the UK property market – and it has made house ownership more of a struggle for ordinary families.
Of this, more than half came from shell companies registered in British Overseas Territories, many of which have been accused of serving as hubs for money laundering and tax evasion due to their opaque company laws that restrict public access to ownership records.
Over 87,000 properties in England and Wales are owned by anonymous firms based in tax havens, with around 40 per cent in London.
In some prime areas of the capital, such as Westminster and Kensington & Chelsea, it was estimated that criminal cash had pushed prices up by as much as 20 per cent, giving rise to so-called ‘lights out streets’ where luxury homes sit empty under the ownership of shadowy overseas buyers.
SmartSearch boss Phil Cotter said: ‘The UK property market is one of the most vulnerable sectors to financial crime, because of the high values involved and the ability for companies to buy, own, and sell property with minimal scrutiny.
‘This allows criminals to exploit loopholes—like purchasing through anonymous shell companies—to clean their money.
Criminals funnelling dirty money into UK property are pushing up the price of an average house in London by £11,000 (file pic)
Since 2016 more than £11 billion of suspicious money has flowed into the UK property market – and it has made house ownership more of a struggle for ordinary families (file pic)
‘These buyers often pay inflated prices to secure quick deals, which in turn distorts the entire market.’
Mr Cotter called on estate agents to face greater scrutiny for failing to stop ill-gotten gains being used for house purchases.
He highlighted data that showed around 14 per cent of the 25,000 registered estate agents in the UK had not undergone adequate anti-money laundering checks.
The warnings follow a report published last month (July) by the all-party parliamentary groups on anti-corruption and fair banking in which MPs from across political parties warned that Britain’s property market was being ‘distorted’ by dirty money which was exacerbating the housing crisis.
They added that criminal activity would ultimately cause the property market to become ‘unfair and uncompetitive’ for ordinary people.
MP Phil Brickell, a member of the APPG on Anti-Corruption, said: ‘These findings prove what we all knew already – dirty money threatens economic growth, national security and our very way of life.
‘Not only are we giving international crooks and kleptocrats a way to clean and stash their ill-gotten gains, but we are pricing hard working people out of housing in the process.
‘It is time to bring an end to the scandal of offshore secrecy by finally introducing corporate transparency registers.’