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Britain’s house prices driven up by foreign crime proceeds

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  • 27/07/2015
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Britain’s house prices driven up by foreign crime proceeds
House prices in Britain are being driven up by foreign criminals using complex offshore companies to purchase luxury homes to launder money, said the National Crime Agency.

The director of the economic crime command at the agency told The Times he was ‘alarmed’ by the number of properties being purchased in this manner.

In the report, Donald Toon said: “I believe the London 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.”

An Annual Tax on Enveloped Dwellings (ATED), which targets companies that own UK residential properties valued over a certain amount, was introduced by the government in 2013 and became effective from April that year.

Properties or ‘dwellings’ are referred to as being ‘enveloped’ because the ownership sits within a corporate wrapper or envelope. As well as being applicable to companies, it is also payable by a partnership where one of the partners is a company or a collective investment vehicle such as a unit trust. The government initially set the threshold as properties valued at more than £2m on 1 April 2012 but lowered the bar to £1m a year later due to raising five times the amount of revenues it had predicted it would collect, according to The Times report.

In 2013 to 2014 the levy raised £100m from 3,990 houses. Of that revenue, 80% came from the City of Westminster and the Royal Borough of Kensington & Chelsea.

The agency said it was concerned how few ‘suspicious activity reports’ came from solictors and estate agents given it received approximately 360,000 reports a year arising from financial transactions.

Savills and Gabelle tax consultants both stressed the use of offshore vehicles was not always a sign of money laundering.

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