Last week, David Cameron hosted the international Anti-Corruption Summit, and met with world leaders to discuss plans to ‘expose, punish and drive out corruption’. It was a landmark event, marking the first such global declaration against corruption, and so served as a platform for some radical suggestions for worldwide reform.
Among the commitments announced was a proposed register, which would document the beneficial ownership details of UK property held by foreign companies. Not only would this apply to all future purchases of property by overseas businesses, but to existing owners as well.
In increasing efforts to close in on money laundering and terrorism, the Government believes there is a need to keep a more vigilant watch on the UK-based property activities of offshore companies, and those who benefit from them. In this case, the intention is to make the UK’s property ownership fully transparent.
It is projected that by making the publication of all foreign-held property ownership details, criminals and terrorists will no longer be able to exploit their assets in the UK.
Although the theory of this proposal is all well and good, the practice of such an overhaul is far from simple. HMRC’s ability to efficiently monitor all property activity, with particular regards to enforcing regulations on foreign companies is being disputed. HMRC have already announced the intention to privatise the Land Registry. The sheer volume of international ownership changes, estimated to be around 400,000 per day as well as the UK based changes may be too much work for the company that takes on this privatisation (and at what cost?).
We wait to see if this proposal, which is not due to come into effect until 2017, will bring forth the desired results. However, the plans have received mixed reviews. When beneficial ownership details are not provided, it is being considered that the property sales and mortgages will be blocked. The huge cost that such a project would incur, casts further doubt on its practicality. In the meantime, a consultation is due to be held on the subject later this year.