The UK Housing Crisis – Stoked By A Cycle Of Crime And Fear

28th October 2017 / United Kingdom

By Graham Vanbergen: Having worked inside the industry for over 20 years at a senior level, I have been saying for years and years that a full blown housing crisis was both imminent and self inflicted. This crisis is made up of a few critical components. The most obvious is simply that there are not enough properties to fill the demand. Government intervention has only made matters worse. But truthfully, the numbers prove what is really going on in the dark.

When house builders do build they want maximum return on investment – hence, they target the largely well off. And as Barclays Bank pointed out in its UK housing report last year, “there is a strong relationship between share prices of house builders and house price expectations.” Needless to say, the government benefit along the way. The higher the price, the greater the stamp duty collected.

Britain’s biggest housebuilding firms and their executives have pocketed billions of pounds as the country’s housing crisis escalates and affordable homes targets are missed time and time again.

The Bureau of Investigative Journalism found that four most powerful companies – Persimmon, Taylor Wimpey, Barratt and Berkeley Group – are making so much money they are planning to give £6.6bn extra in dividends to shareholders by 2021, enough to build nearly 20,000 new homes at £350,000 each. Meanwhile the number of affordable homes built throughout 2016 fell to a 24-year low.

But there’s much more to the housing crisis today because the government refuses to clean up the market. First, the government supported the banks when they blew up the economy …. via the property market. Successive Labour and Conservative Chancellor’s have raided hundreds of billions from pension funds then ‘reformed’ them enabling people to ‘unlock’ their funds early – to raise yet more taxes. So frightened are the invested pensioners of the near future that billions was extracted and poured directly into the housing market. The result, two million bought buy-to-let properties in a decade and now own 20 percent of the entire housing stock of Britain.

But if that wasn’t bad enough, here’s another fact that has been under-reported for decades. The number of properties bought by foreign investors and illegal off-shore transactions has soared and is now so prevalent that even commercial property is feeling the effect as new home prices have been pushed beyond their realisable maximum’s. As much as 90% of investments in London commercial property in the last quarter came from overseas. That might sound encouraging given the disastrous management of Brexit, but what it really says is the foreign buyers have run out of suitable brick-and-mortar to buy.

Here is a great example. Over a third of properties sold in a new Kensington and Chelsea development last August were purchased via anonymous companies or by buyers from states considered to be a high corruption risk, according to a new investigation by Transparency International UK.

An analysis of Land Registry data for 153 new homes in one development at 375 Kensington High Street found that more properties could be identified as being bought through companies based in the British Virgin Islands – a known secrecy haven – than any other jurisdiction, including the United Kingdom itself. Read that paragraph again and let that settle in.

Despite forty-five per cent of the analysed land titles failing to reveal any country of residence for buyers, where residents’ information was available, it overwhelmingly shows that new homes have been purchased by overseas customers, and very often through mechanisms that allow for anonymity.

SafeSubcribe/Instant Unsubscribe - One Email, Every Sunday Morning - So You Miss Nothing - That's It

Rachel Davies Teka, Head of Advocacy Transparency International UK, said:

“When property is purchased anonymously there is a heightened risk that it was bought using the proceeds of illicit activity, including corruption. This matters because it could mean that corrupt officials who are stealing vital resources from their people are able to hide that stolen wealth in the UK property market. This facilitates the devastating effects of corruption in the countries where money has been stolen from as well as in the UK, where ordinary people struggle to gain access to housing.”

“The UK Government has consistently made all the right noises about doing something about this problem, but has so far failed to translate those words into legislative action. The Government must urgently clarify whether it intends to be part of the problem or the solution to the UK’s role as a safe haven for corrupt money.”

Transparency International were, by their own words, being charitable at best.

More than anything, the key finding of TI’s report into 375 Kensington High Street was not that 36% came from anonymous companies or high corruption risk states, or that 45% had no residency data, but that in total, only 9% were bought by people identified as UK based. Or to put it another way: 91% were acquired by those wanting to hide their ownership from eyes of the law somewhere.

Let’s not beat around the bush here. These anonymous buyers are only anonymous in the first place because they don’t want the authorities anywhere in the world to know what’s going on. Estate agents, solicitors, banks, accountants, surveyors and house builders themselves are all in on the game. Their clients are drug barons, despots, dictators, arms dealers, traffickers and the like. They make money from murder, rape, slavery, drug addiction, weapons/munitions sales and an ever increasing wave of human misery across the planet. Of course, many are just thieves or don’t want to pay tax. They’re still crooks. The cash derived from all this illegality has to be laundered and then hidden in a jurisdiction that protects ownership – and property in Britain is the most highly protected anywhere in the world. From 350,000 money laundering enquiries generated in Britain, not a single banker, accountant, estate agent or facilitator of this crime wave is a resident of her majesty doing time. Not one.

TI international also found in a previous report about 7% of all land titles in the UK was owned by anonymous companies. But this does not include those owned by trusts or nominated owners or indeed even the brazen that do admit who they are. One example of that was a mansion that the son of murdered Col. Gaddafi, Saadi bought in 2009. The purchase of a mansion for nearly £10 million was all over the national press and no-one thought for a moment that the funds used to acquire it were illicit. Which of course they were, which is why the Libyan authorities demanded the asset back when the regime fell. The original purchase went though a British Virgin Islands offshore company. Today the stamp duty would attract £1.4 million but the taxpayer received nothing at the time.

Saadi Gaddafi then roamed around London, as playboys do, hosting by all accounts noisy and over the top parties, getting drunk whilst building a reputation for snorting white powder from the thighs of girls of dubious character. No-one thought to ask how his official military wage in the Libyan army of £34,000 managed to stretch so far. And why he wasn’t there.

This is the reason why there’s a housing crisis. The builders aren’t building for average Joe Public. They sell expensive units for what they can to highly questionable foreign buyers, if not, they target those frightened of crooked banks and failing pension providers (nearly 90% of all private pension providers in the UK are in deficit today) and by the time they look to the general public more than half of all properties built have been sold. To sell what’s left, the builders then offer all sorts of incentives, that the taxpayer funds because Joe Public can’t really afford any of them anyway. It’s a cycle of crime and fear, stoked up by a government unwilling to act because it wants to force house prices up as it’s just about the only thing that’s ‘strong and stable’ right now.