Sadiq Khan has demanded that property assets held by allies of Russian president Vladimir Putin are seized by the UK authorities following Russia’s invasion of Ukraine and has proposed wider measures for identifying and regulating the ownership of foreign-owned homes in the capital.
Citing an estimate by anti-corruption campaigners Transparency International that 100 London properties worth £1.1 billion in total are owned by what City Hall calls “Russians accused of corruption or links to the Kremlin”, the Mayor said government ministers “have turned a blind eye to the use of our capital’s homes as a safe harbour for oligarchs to park their cash” and claimed this is having “a negative impact on both our international reputation and our local housing market”.
As well as a register of overseas property ownership, Khan called for an increase in capital gains tax on overseas buyers from the current 28 per cent to 40 percent, a hike in the yearly tax paid by overseas companies investing in UK property, and higher rates of council tax to be levied on homes left unoccupied by overseas owners.
City Hall says its analysis suggests such changes could raise up to £370 million a year for investment in council and other “affordable” homes in London. It stresses that such policies would apply only to property owners who live abroad, as distinct from people from other countries who make the capital their place of residence.
“London will always be open to foreign investment and the millions of people from around the world who choose to make our city home,” Khan said. “But we must take proactive measures to insist on a greater contribution from overseas buyers, clamp down on those who look to exploit our openness, and use the money to invest in social and other low-cost homes for Londoners.”
The effect of investment in property from overseas on London’s housing market and affordable supply is contested. A 2017 report for Khan by London School of Economics academics concluded that its inflationary impacts may be overstated and that it contributes to the delivery of affordable housing.
There is already scope for a 100 per cent so-called “empty homes premium” to be secured through council tax, which was introduced in 2013, but Khan is asking for this to be raised to 300 per cent for overseas owners.
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An unusually sensible comment by the mayor. It is a pity that his track record is so tarnished that it is likely to be disregarded simply because it is he who made the comment.