The Impact of Money Laundering on Housing in London

Meeting: 
MQT on 2015-09-16
Session date: 
September 16, 2015
Reference: 
2015/2753
Question By: 
Murad Qureshi
Organisation: 
Labour Group
Asked Of: 
Murad Qureshi
Category: 

Question

Further to my question MQ 2015/0980, are you still in denial regarding the impact of money laundering on housing in London?

Answer

Answer for The Impact of Money Laundering on Housing in London

Answer for The Impact of Money Laundering on Housing in London

Answered By: 
Murad Qureshi

Boris Johnson MP (Mayor of London):   Murad, on money laundering in the London property market, this is very serious.  As I have said, I am concerned that large sums are - as I said before - coming into the city.  What the Government has done is to put the annual tax on dwellings on people who buy homes through a company.  What I have said before is that seems to be working in the sense that it is producing a great deal of income for the Treasury.  That is fine by me. 

However, if it is the case - as the National Crime Agency is now saying - that it had evidence of real money laundering, racketeering, then it needs to be pursuing that.  There needs to be proper transparency in the Land Registry and elsewhere. 

Murad Qureshi AM:  Mr Mayor, I am glad you have changed your position.  When I put those questions in at the beginning of the year you, and your officers, were in complete denial about the issue.  My questions were posed on the back of a Transparency International report that suggested something like 45,000 properties were registered under foreign companies registered in offshore secret judiciary.  In boroughs like the City of Westminster - my home borough - one in ten properties is affected by this.  On the street people talk more about this in Paddington, Maida Vale and Marylebone than right-to-buy quite honestly.  It does have a huge impact.  Am I right in thinking that you will not be encouraging London to be a place to stash dodgy cash as the Prime Minister has said?

Boris Johnson MP (Mayor of London):  No.  I saw what the Prime Minister had to say in Singapore.  He is completely right.  My point is London does receive a great deal of international investment in property, much of which drives the creation of homes that would otherwise be deliverable.  That is a point I have made many times.  What you cannot have is a city that is being used as a sort of bank account by crooks around the world.  You need to be looking at the Land Registry and who ultimately owns this property.  So far we have relied on this annual tax.

As I said to you before, Treasury’s assumption was that the tax would be so onerous that people would start disclosing who they were rather than pay it.  Actually they paid through the nose and they continue to pay.  As a disclosure mechanism it is obviously not working.

Murad Qureshi AM:  Mr Mayor, can I bring it to a London level rather than a national level?  I am glad you mentioned the National Crime Agency.  I will just confirm to my other Assembly Members what Donald Toon [Director of Economic Crime, National Crime Agency] actually said.  He believes,

“The London property market has been skewed by laundered money.  Prices are being artificially driven up by overseas criminals who want to sequester their assets here in the UK.”

For example, around Baker Street you have an allegation that there is a brutal Kazak official who has bought £147 million worth of London residential properties on and off that location. 

I want to know what you are asking the MPS to do to prevent money laundering in London’s property market.

Boris Johnson MP (Mayor of London):  The National Crime Agency has made these allegations.  If the National Crime Agency has any such evidence it should immediately produce it and give it to the MPS and, of course, it will get on with it.  I am aware of what Donald Toon has said but I have not yet - apart from that quotation - seen the detail of what he is commenting on.  He needs to produce that and give it to the MPS.

Murad Qureshi AM:  I understand that there has been a lot of work done on this front.  It also needs a message from the Mayor of London saying that he is not keen on London being the centre of money laundering around the world ‑‑

Boris Johnson MP (Mayor of London):  I am not.

Murad Qureshi AM:  ‑‑ and get the MPS resources in.  I understand actually the MPS has combined its team on this front into the National Crime Agency and I welcome that.  I want you to be aware of it and make sure you are making the case to the MPS so it does not lose track of it like your concern about the looting of ancient artefacts.

Boris Johnson MP (Mayor of London):  Exactly.  It goes back to what we were saying earlier.  It is one of those international dimensions to London that places this incredible burden on the MPS.  Tracking down the origin of funds from overseas requires a great deal of detective work.  It requires very specialised officers.  It requires investment.  It is one of the reasons why the conversations we have been having with Joanne McCartney [AM] and others today are so important.  We have to keep proper funding for the MPS.

Murad Qureshi AM:  Can I make my final point?  Will you, as Mayor, support Transparency International’s recommendation that estate agents should also exert due diligence checks on the purchasers of properties and not just sellers?  That is one thing it thinks is useful.  At the moment estate agents only do a due-diligence check on sellers.  It wants to see this being done on purchasers at the top end of the market at least.

Boris Johnson MP (Mayor of London):  Due diligence done by estate agents?

Murad Qureshi AM:  Yes.  It is actually supported by the National Estate Agency. 

Boris Johnson MP (Mayor of London):  Again, what you really need to have is transparency about who is buying these properties.  You need to know who they are.  If it can be done without completely burdening estate agents with the kind of detective work for which they are simply not equipped then, yes, I would certainly support it. 

Murad Qureshi AM:  That is what I think Transparency [International] need from you.