Frontmen for anonymous foreign firms that invest cash in British property face up to two years in prison and unlimited fines if they flout proposed new laws.
The Government announced the plans aimed at cracking down on money laundering as part of its long-awaited response to a consultation on the billions of pounds of high-end UK property owned by overseas shell companies.
Under the plans, beneficial owners of overseas companies investing in property must be named on a public register but campaign groups say the plans do not go far enough. The Government has said it will publish draft laws this summer.
However, concerns have been raised about the fact that any new rules will not be implemented until 2021.
“Today’s announcement gives the criminal and corrupt another three years to invest their stolen cash in London’s property market,” Naomi Hirst, anti-corruption campaigner at Global Witness, said on Thursday.
“If Theresa May is serious that these people and their money are not welcome in the UK, it’s time she put her money where mouth is and put an end to this secrecy and table this legislation immediately.”
Property ownership by foreign entities has come under renewed scrutiny following the attempted murder of former Russian spy Sergei Skripal and his daughter Yulia.
Russian figures connected to Vladimir Putin are thought to own British properties worth close to £1.1bn, and the true value may be much greater because ownership can be concealed.
Duncan Hames, director of policy at Transparency International UK welcomed the Government’s response but described the lack of urgency to implement new rules as “disappointing”.
“They had planned for legislation to be introduced by next month but this has been delayed by at least a year.”
“The prime minister and other government officials have not been shy in recent weeks in speaking about cracking down on corrupt money in the UK.
“The best way to do this is to bring about transparency to holdings of UK property which overseas companies currently avoid.”
At least £122bn of property in England and Wales is owned through companies based in secretive tax havens where true ownership can be difficult or impossible to establish, according to a 2014 analysis by the Financial Times.
The large sums of money flowing into UK property are also thought to distort the market, particularly in London, where millions are already priced out of owning a home.
Business minister Andrew Griffiths said the UK was taking a leading role in the global fight against corruption.
“Our public register will ensure we know who owns UK property wherever they are from and will help authorities come down hard on frontmen seeking to conceal their paymasters’ true identities,” he said
“This is the first register of its kind in the world and we must be careful to ensure it strikes the right balance between improving transparency and minimising burdens on legitimate owners.”
Peter Dowd, shadow chief secretary to the Treasury, said: “We are glad the Government is finally seeing the light and has accepted Labour's calls for a register of beneficial ownership.
“While the Government's Damascene conversion on the case for public registers is an important step, it must be followed through with meaningful action to tackle the scourge of tax avoidance through the introduction of a full public register of offshore trusts in UK overseas territories and crown dependencies.
“Labour is calling on the Government to go further and adopt our tax transparency and enforcement programme in full.
“It is the only way to ensure that everyone pays their fair share and we finally have a tax system that works for the many, not the few.”
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