Criminal money laundering through the UK’s property market is driving up house prices and worsening affordability and agents are caught in the thick of it, according to new analysis.
Research by SmartSearch estimates that illicit funds have inflated property prices by an average of £3,000 nationwide and more than £11,000 in London.
The firm said that since 2016 over £11 billion of suspicious wealth has been channelled into UK property, more than half via shell companies registered in British Overseas Territories.
In England and Wales, more than 87,000 properties – worth over £100 billion – are now owned by anonymous offshore companies, with London accounting for 40% of the total.
FINANCIAL CRIME
Phil Cotter, chief executive of SmartSearch, says: “The UK property market is one of the most vulnerable sectors to financial crime, because of the high values involved and the ability for companies to buy, own, and sell property with minimal scrutiny.
“This allows criminals to exploit loopholes – like purchasing through anonymous shell companies – to clean their money. These buyers often pay inflated prices to secure quick deals, which in turn distorts the entire market.”
DIRTY MONEY
And he adds: “In some prime areas of London, dirty money has inflated prices by up to 20%, pushing first-time buyers and local families out. In boroughs like Westminster and Kensington & Chelsea, offshore buyers have created so-called ‘lights-out streets’, where luxury homes sit empty while local communities suffer.”
“Too many estate agents are failing to act as the first line of defence”
SmartSearch warned that too many estate agents were failing to act as the “first line of defence” against money laundering.
Nearly 200 were fined more than £1 million in recent months for breaches of anti-money laundering (AML) rules, mostly for trading while unregistered.
HMRC’s supervised business register shows that of almost 25,000 VAT and PAYE-based estate agencies in the UK, about 3,400 – 14% – are operating without AML oversight. Among those registered, more than half admitted they do not always verify the people controlling business clients, and 3 per cent said they never do.
VITAL TOOL
Cotter says: “If estate agents don’t take their anti-money laundering responsibilities seriously, the UK property market will remain a magnet for dirty money.
“With thousands of agents still unregistered or failing to carry out even basic checks, we’re allowing criminals to distort the market – and it’s ordinary people who are paying the price. We recognise the pressures estate agents are under, which is why we’re committed to helping them navigate AML regulations and protect all involved.
“These regulations are not a burden, but a vital tool to stop criminals from distorting our market.”
