It is believed that there are in excess of 100,000 UK properties owned by foreign companies where the true identity of the owners is unknown. The so-called “Panama papers” have cast a very inconvenient light upon the world of international investment forcing governments such as the UK to act sooner rather than later. David Cameron has therefore taken advantage of the recent international summit on corruption to confirm that the UK will force foreign companies owning UK property to identify the underlying owners.
While activists have welcomed this move by David Cameron it is worth noting that similar moves were promised some time ago. Is this a way in which to deflect the recent off-guard comments of David Cameron and the Queen? Or are we finally seeing governments around the world introducing more anticorruption measures?
Dirty money
In a speech last year David Cameron used very emotive phrases such as “dirty money“ and “plundered or laundered cash” when discussing foreign ownership of UK properties. There is speculation that so-called “dirty money” could account for up to £120 billion worth of UK property assets spread right across the UK although more focused in London. It is all good and well throwing about these figures but by very definition the UK authorities are unable to say with any certainty whether any or how many of the assets held by foreign companies were acquired using dubious funding.
Greater transparency
While there is no doubt that investment markets work best when there is greater transparency it will be interesting to see how the UK government follows through with this recent announcement. The current government, as well as previous governments, have on numerous occasions attempted to force foreign investors to reveal their identities only to be caught up in tax havens and offshore shell companies. It is possible to force foreign companies to reveal their underlying owners but will the UK government really be brave enough?
Is it also a coincidence that the so-called Panama papers are still causing waves across the worldwide investment market? Has the UK government been forced into a corner and will other foreign governments follow suit?
Why now?
Making this announcement at an international corruption summit makes perfect sense and it will also receive maximum exposure. The UK government has for some time at least attempted to give the impression of leading the way in relation to money-laundering and so-called dirty money. A number of arrangements with overseas tax havens have led to the recovery of millions of pounds of undeclared funds. At a time when budgets are stretched across the Western world what better moment to reveal undeclared assets/income and reclaim as much tax as possible?
Amongst the cries for justice it is easy to forget that London is one of the major investment markets around the world for an array of different asset classes. It is therefore vital that as trends change in the worldwide investment market, London is seen to be leading the way. In many ways this also overshadows any moves by the European Union which has for some time been trying to undermine the leading role of the London investment markets.