According to newly installed London Mayor Sadiq Khan, London is in danger of becoming the world’s money laundering capital (if it isn’t already) – and it isn’t the banks and brokers to blame.
In a clear dig at his predecessor and pro-Brexit campaigner Boris Johnson, Mayor Khan stated in an interview on ITV’s Peston on Sunday show that one of the key problems left by the Johnson administration which he is seeking to address is London’s high priced housing market, which continues to attract investment from abroad in large numbers.
(According to a recent study, recently-freed-from-sanctions Iran plans to spend in the neighborhood of $8 billion on property around the world, much of it in London).
Khan hasn’t yet come up with a concrete solution, but floated ideas such as giving London residents the first option on new homes, and requiring developers of new properties to market them for the first six months in London to secure planning permission.
We shouldn’t be embarrassed for saying first dibs for Londoners. We should not be embarrassed about saying ‘our homes are homes’, not gold bricks for investors in the Middle East and Asia.
I have got nothing against luxury properties being built in London. What we can’t have is London being the world’s capital for money laundering.
There is a lot a mayor can do. The last mayor for the last eight years did hardly anything.
The problem isn’t just a local London one, but a national issue as well. British Prime Minister David Cameron recently announced a crackdown on real estate purchases involving anonymous shell companies using plundered or laundered cash, indicating that in the future the names of all property owners would be publicly registered.
To begin addressing the issue, Mayor Khan has appointed James Murray, a Councillor known for his strict enforcement of affordable housing targets in the north London borough of Islington, as his new housing chief.
Some real estate experts have warned that interfering with foreign investment into London could backfire, in part because of recent lagging demand.
The issue (like everything else nowadays in the UK) has become in part a Brexit one.
However Brexit campaigners have also questioned whether plans to give Londoners first option on purchases would be enforceable, given the free movement of capital rules in the EU treaties which would survive Brexit (if it happens). Similarly, the Leave side has stated that its research showed that the rules hindered a crackdown on offshore people and companies buying property in the UK, whether based inside the EU or in third countries.
The general principle of free movement of capital among EU countries as well as non-EU countries includes the rights of citizens to purchase property, such as a holiday home or secondary residence.