March 3, 2022

As Russian bombs rain down on Kyiv, we should gaze upon our own capital with disgust. How did we allow London to become a piggy bank for Putin’s cronies? 

The Government has announced new measures to “flush out the oligarchs, criminals and kleptocrats who think they can use UK property to hide their illicitly obtained wealth”. But let’s be honest: these people don’t “think” they can use UK property in this way — they know they can, which is why they’ve been doing so on a massive scale.

According to the anti-corruption campaigners, Transparency International, £6.7 billion in “questionable funds” have been invested in UK property since 2016 — £1.5 billion of which was bought by Russians accused of corruption or links to the Kremlin. No wonder that London is a described as a “laundromat” for “suspicious wealth”.

Boris Johnson may claim that “there is no place for dirty money in the UK” but, quite obviously, the UK has been — and still is — a place for dirty money. And the Government is now struggling to do anything about it. Yesterday, Keir Starmer confronted the Prime Minister: “Why are we giving Putin’s cronies 18 months to quietly launder their money out of UK property?”

Good question. Back in 2016, the Government hosted a “landmark” anti-corruption summit at Lancaster House in London. David Cameron, Prime Minister at the time, was very clear about what Britain would do: “First, we will expose corruption so there is nowhere to hide.”

His specific pledge was to create a “new public register of beneficial ownership” for foreign companies operating in the UK. Instead of hiding behind shell companies and other legal smokescreens, “everyone in the world will be able to see who really owns and controls each and every company”. An accompanying press release promised that this “will include companies who already own property in the UK, not just those wishing to buy”. And to emphasise Britain’s leadership on this matter, it was stated that “this will be the first register of its kind anywhere in the world”.

Well, it might have been had ministers got on with the job; but they dawdled. This week, Boris Johnson finally committed his government to the necessary measures. “We are going faster and harder to tear back the façade,” he said. Let’s hope so — because it’s been almost six years since the Tories promised the property register and it hasn’t happened yet.

In 1085, William the Conqueror ordered a Great Survey, which covered every county of England and named over 13,000 places. Yet William’s surveyors completed their work — which became the Domesday Book — in 1086.

It seems ridiculous that its modern-day equivalent should take so much longer. Admittedly, there are nearly 100,000 properties owned by foreign companies in the UK. Establishing their true ownership is no small task. But that’s all the more reason why the effort should have started years ago. Why then was it delayed?

We can’t really blame David Cameron. Hosting the corruption summit was one of his last acts as PM. Can we blame his successor? Did Theresa May drop the idea when she took over? No, it continued as official policy under her administration — and also Boris Johnson’s. Rather, the problem was the glacial pace of implementation. 

There was a consultation 2017, followed by a draft bill — and yet more consultation. In 2018, the Government expressed its intention for the register to be operational by 2021. That deadline was missed. In fact, until the events of last week, the necessary legislation hadn’t even been scheduled. When pressed to do so, ministers just answered that “we will legislate when parliamentary time allows”. 

This week, a panicked Government pulled its finger out and by Tuesday, the Economic Crime (Transparency and Enforcement) Bill made its long overdue appearance. It’s as if it were already drafted, ready-and-waiting to go — so why did it take Putin’s bloody war to prompt ministers to act?

Some might suspect undue influence, but there’s no need for conspiracy theories. The Government’s inactions are consistent with this country’s general lack of transparency over property ownership. 

For instance, it should be possible to go to an official website and freely access a map showing exactly who owns every piece of land in the country. But you can’t. For a fee, the Land Registry does provide limited information on individual plots. However, to get this data for the whole of England and Wales would be extortionately expensive. Guy Shrubsole — author of Who Owns England?puts the cost at £72 million. 

Even then, about a sixth of the land in this country isn’t registered at all. There is no requirement that it has to be, unless sold or inherited. The Government could put this right if wanted to — for instance by requiring registration as a condition of receiving farm subsidies — but it hasn’t. Indeed, far from empowering the Land Registry, there were two attempts (while George Osborne was Chancellor) to flog it off to the highest bidder. Fortunately, the privatisation was cancelled by Osborne’s successor, Philip Hammond.

True transparency isn’t just about who owns the land, but also about who controls it. In particular, we need a public register of land options — legal agreements which give property developers an exclusive right to purchase potential building sites. The urgency is that options enable land-banking — the practice of sewing up the supply of potential building sites so that property developers can ration the supply of new housing to the market.  

In 2016, one Cabinet minister, Sajid Javid, had the guts to condemn the land-bankers. Measures to improve transparency were subsequently proposed. But, true to form, the Government has yet to follow through. In fact, it hasn’t even responded to the public consultation which closed in October 2020. 

It’s as if ministers don’t want to blow the lid on the murky world of British property. And no wonder. Government policy still operates on the basis that escalating property prices are a good thing. And nothing can be allowed to get in the way. For instance, Rishi Sunak wasted billions of pounds on propping up the housing market during the pandemic — when it clearly didn’t need any help.

Encouraging overseas investment in British property is an integral part of this insane, inflationary obsession. The Tier 1 Investor Visa scheme is a prime example. Introduced under Gordon Brown in 2008, the idea was to dish out visas on the condition that the recipient invested at least a million pounds in the UK economy. Needless to say, no distinction was drawn between job-creating investment and property speculation which only pushes up the cost of housing. 

Last month, after years of criticism, the scheme was finally shut down with “immediate effect”. Apparently, the Government was concerned that the route was being exploited by money launderers and other criminals. Nothing gets past the Home Office.

Of course, I’m not saying that the London property market is entirely sustained by foreign corruption and criminality. Most of the money that flows into it — including overseas sources — is above board.

Yet this is an under-taxed and under-regulated industry that provides an ideal environment for the world’s worst people. And for what? Inflating land values enriches the wealthy, while those without property — especially the young — pay the price. Our economy is weakened and our democracy damaged.

When William I ordered his Great Survey, it was an act of domination — of taking control of a conquered land. A modern-day Domesday Book would be the precise opposite: a means by which we take back control of our own country.

Sign up to UnHerd's new weekly email, in which Will Lloyd selects the best (and occasionally worst) writing from around the web.

Free, every Friday morning.