Scale of investment

Question 1

How much of London (overall) does international investment take up?

Answer 1

A Hamptons report from December 2016 showed international buyers accounted for 29 per cent of the London housing market.8 In ‘prime’ areas of London – the most expensive, ‘desirable’ homes in central London – overseas buyers made up 60 per cent of the market.

Question 2

Is the scale of overseas investment really that significant?

Answer 2

Since 2008 £100 billion of London property has been bought by overseas companies based in secrecy jurisdictions; an indicator for illicit wealth or investors seeking to evade capital controls like those of China and Russia.

Question 3

What’s the monetary value of international investment in London?

Answer 3

In 2012 Savills estimated around £7 billion was invested per year into London’s prime property market but it is likely this has risen since then. Brexit = drop in pound led to an increase

Question 4

What are the 3 categories of overseas investment?

Answer 4

• Regular investment: where an overseas buyer purchases UK property, usually to live in or rent out
• Legal capital flight: where instability in another country leads to overseas investors with legitimate
wealth buying UK property as a ‘safe haven asset’ to keep their assets secure
• Illicit investment: where an individual uses illicit wealth – often the proceeds of corruption – to
purchase a property, thus laundering funds which have been obtained through criminal activity

Question 5

What’s the level of investment in other parts of the UK?

Answer 5

Speaking just about high-corruption risk properties - 84% of the properties we identified were in London, totalling £4.2billion.

Question 6

Which countries are the main investors in luxury property?

Answer 6

Savill’s 2014 report shows investors from the Middle East, Russia and Eastern Europe play a significant role in the luxury home market, with Russians buying 8.5 per cent of all London properties worth more than £2 million between March 2012 and March 2013.142 Buyers from South East Asia are another significant investor group, favouring new build property; in 2013 investors from Hong Kong and China were the biggest demographic in London’s new build prime in 2012-13, accounting for 27 per cent of the market by volume.

Question 7

What are the authorities doing about it?

Answer 7

• The UK has also frozen £9.5 billion in funds from the Libyan Investment Authority – not clear how much related to corruption as Gadaffi didn’t differentiate between personal and public wealth.

Question 8

What did the Panama Papers tell us about housing?

Answer 8

• PP identified 2800 companies (connected to Monsack Fonseca) on the Land Registry overseas companies list owning 6000 UK properties worth at least £7billion (although many of them didn’t have price paid data.
• 43 high net worth individuals have been placed under special review by authorities

Question 9

What’s a PEP?

Answer 9

An individual who is or has been entrusted with a prominent function.

Question 10

Are PEPs an ML risk?

Answer 10

Yes – because of their positions of power and access to large budgets
TI/TR research found 986 land titles connected to PEPs
We found (From open-source data analysis) over 60 PEPs & high-risk individuals owning London property: 36% convicted for corruption offences or facing charges; many do not have sufficient salary.

Question 11

What are estate agents doing?

Answer 11

• low level of SARs compared to transactions: 355 SARs to 440K transactions

Question 12

What are professionals (legal and agents) doing?

Answer 12

• low level of SARs compared to transactions (355 agents; 4000 total); 440K transactions in 2015
• some are even complicit
• low level of enforcement:: £20K (average commission by EA on a £1M house sale) vs (1134 (average fine for ML breaches by supervisor HMRC)