If we want to talk about the housing affordability crisis in global cities, then we can’t avoid talking about corruption and the opacity of ownership as well. Take the case of Vancouver, Canada: it is estimated that in 2018, more than $5bn of dirty money from organised crime flowed through real estate in the city, inflating house prices by at least 5%. The UK, and London specifically, fares little better; in the words of Transparency International, this country ‘has been a prime location for stashing away illicitly gained wealth’, since ‘sectors such as UK property represent a safe investment, as well as a place to hide corrupt money’. One’s thoughts naturally turn to the luxury ‘dark towers’ springing up across the capital when reading this assessment.

There is no silver bullet to deal with this nexus of organised crime, tax avoidance and financialised real estate, but the ideal place to start would be the extension of beneficial ownership disclosure requirements. The beneficial owner of a company is the person who ultimately owns or controls it, even though the title to the property is in someone else’s name. Since 2016, the UK has had a beneficial ownership register applying to UK companies and LLPs. However, this legislation still leaves much to be desired since companies who hold UK property but are registered in other countries and in UK Overseas Territories do not fall under its remit. This may sound a minor quibble, but given the amount of corruption and tax avoidance facilitated by the UK Overseas Territories (or OTs), it is far from it.

Plans to extend beneficial ownership requirements to foreign companies were first mooted in 2018, but despite continued assertions by Boris Johnson’s government that it wishes to press ahead with these plans, the legislation has still not been introduced three years later. Also in 2018, Theresa May’s government was forced by a cross-party amendment to the sanctions and anti-money laundering bill to commit to introducing publicly accessible beneficial ownership registers to the UK OTs. While this was a positive step, and reluctant OTs eventually agreed to the plans in 2020, the government has admitted that its target of these registers being operational by 2023 may prove too challenging.

The question is: why have these efforts taken such a long time? In fairness, the UK is not an outlier here; EU countries have a record that is patchy at best in implementing publicly accessible beneficial ownership registers, despite being instructed to by 2020.  But if we are to see Boris Johnson’s much-vaunted ‘Global Britain’ become a reality, it should do what it has long been claiming to and genuinely lead on beneficial ownership transparency. Doing so would not only help deal a blow to organised crime; it could also make a contribution, however small, to the housing affordability crisis, and let us find out who the owners of the homes and apartments standing empty in our cities really are.

1) https://vancouversun.com/business/real-estate/money-laundering-hikes-b-c-real-estate-prices-report

2) https://www.investopedia.com/terms/b/beneficialowner.asp

3) https://www.theguardian.com/politics/2018/may/01/uk-to-introduce-public-ownership-registers-for-overseas-territories

4) https://www.gov.uk/government/publications/overseas-territories-adopting-publicly-accessible-registers-of-beneficial-ownership/overseas-territories-progress-made-on-improving-transparency-and-addressing-illicit-finance-flows-explanatory-note