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The Guardian - UK
The Guardian - UK
National
Robert Booth Social affairs correspondent

London council could seize oligarchs’ homes for affordable housing

Eaton Square, London
Eaton Square. Westminster has 4,000 households on the waiting list for affordable homes. Photograph: Richard Baker/Alamy

Homes acquired with “dirty money” in the richest parts of London could be seized and turned into affordable housing under plans to crack down on oligarchs using Belgravia, Knightsbridge and Mayfair “to rinse their money”.

Labour-controlled Westminster city council is examining the use of compulsory purchase orders in extreme cases where it finds properties are not being used for their stated purpose, as part of a push to “combat the capital’s reputation as the European centre for money laundering”.

The plan faces obstacles including a lack of transparency over property ownership and a shortage of checks on the registration of companies, but the council is threatening to use seized homes to help reduce the waiting list for affordable housing of 4,000 households.

The number of properties in Westminster registered to owners in Jersey and Russia has risen by 300% and 1,200% respectively since 2010.

The council is exploring the use of a compulsory purchase order against a property registered in Seychelles, the owner of which has run up significant council tax arrears.

Russians accused of corruption or of links to the Kremlin have bought property worth nearly £430m in Westminster since 2016 – more than in any other UK area – according to researchers at Transparency International UK (TIUK).

It is believed that property worth about £283m has been purchased in neighbouring Kensington and Chelsea.

Adam Hug has been leader of Westminster council since May, when Labour took control for the first time after 58 years of Conservative rule.

He said: “Westminster’s dirty secret has been known for many years, but those in power looked the other way for too long as money of questionable origin flooded into London and investors took advantage of our relatively lax laws.

“It took the war in Ukraine to refocus attention on oligarch investments and what London has become in terms of a European laundromat for dirty money.”

He said the problem went further than “[Vladimir] Putin and his henchmen”, and that it damages London’s reputation by supporting authoritarianism abroad. Hug added that it “drains the vitality of areas with empty or underused homes”.

The council is mapping properties owned overseas against council tax data to determine whether they are being used for their stated purpose.

Westminster plans to target homes it finds have been acquired with “dirty money” or “money of dubious origin”. The council defines dirty money as that obtained from criminal activity including bribery, theft of state funds and misuse of public office.

Money of dubious origin is money where there is no or limited transparency of how the funds were acquired, often associated with the use of tax havens or elaborate corporate constructions to avoid tax.

Rose Zussman, policy manager at TIUK, said: “It is no secret that kleptocrats and those with money to hide have invested vast sums into the Westminster property market over the years. It is promising to see the council seeking to help expose and recover these illicit assets.”

But she said any funds reclaimed that are linked to corruption should go back to victims in the origin state “to ensure justice is served”.

Hug is also convening a meeting of property owners, experts and officials in the capital to join the “Westminster against dirty money” campaign and is calling on the government to restrict the artificial use of tax havens, and increase funding for the National Crime Agency and HMRC to fight money laundering.

The council wants stronger identity checks when people register companies and the new beneficial property ownership register to be fully implemented.

The register went live last month and overseas entities that already own or lease land or property in the UK must submit their registrable beneficial owners or managing officers by 31 January 2023.

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