Scotland, as many know, is quite a few years ahead of England with land reform.
A summary of Faulty Towers: Understanding the impact of overseas corruption on the London property market by Transparency International UK (2018)
As well as providing homes, the UK property market has long been recognised for providing a reliable investment opportunity. Whilst much of this investment will be from genuine investors seeking a steady income, there is now substantial evidence to show that:
‘UK real estate, particularly in London, is attracting corrupt officials and businesspeople who have stolen money from some of the most impoverished and repressed countries in the world’ (p4).
Since 2015, Transparency International UK (TI UK) has been examining the potential impact this illicit wealth might be having on London through surveying Londoners and analysing open source data such as the Panama Papers, articles by investigative journalists and Land Registry data. In so doing, they reveal how people launder stolen money into the property market, often through the use of ‘anonymous’ companies registered overseas. These organisations cannot be found on a public register and leave few paper trails, allowing their owners to enjoy their gains without scrutiny.
The London housing crisis
In London, house price rises consistently outstrip wage increases, dozens of prospective buyers compete for a shrinking pool of affordable stock whilst rent prices rise ever higher. As a consequence, it is becoming more difficult to afford to stay in London for average people, with the Government admitting the UK housing system was ‘broken’ in February 2017.
Overseas investment is just one of a range of factors that may be driving the crisis. Others include the lack of social housing, increased domestic demand and the shortage of development land. But TI UK’s report reveals that corruption overseas is also likely to play a significant contributory role, albeit in some slightly unexpected ways.
Understanding overseas investment into property
A significant amount of illicit investment into the property market stems from individuals buying homes to launder corrupt funds to conceal its criminal origins. This cleanses large amounts of illicit wealth in a single transaction and provides the individual with a valuable asset. London property retains value and often offers almost certain profit, with prices rising even amidst uncertainty over Brexit in early 2016.14
Corrupt individuals also buy homes in London because they provide a bolt hole in case they fall out of favour in their home country. Buying mansions in sought after areas of London or in exclusive new build developments comes with status, helping corrupt individuals distance themselves further from past corruption offences a practice which can be described as ‘reputation laundering’.
The London property market is highly vulnerable to corrupt wealth flowing into it. Analysis of open source material found over £4.2 billion worth of properties bought with suspicious wealth.
Corruption causes high levels of instability abroad leading to ‘crisis capital’ being placed in safe havens like London. Since 2006 around £100 billion of hidden inflows have entered the UK.
House prices are affected as illicit wealth and crisis capital entering the UK increase demand in the London housing market, particularly at the top-end; ‘the ripple effects they generate resonate across London’,
New build developments are built targeting wealthy international investors and are not meeting demand for affordable homes. In 14 landmark London developments almost 40 per cent of future homes were bought by those from high corruption risk jurisdictions.
London’s role as a global safe haven is resulting in homes being purchased and not used. Areas with higher levels of property owned by anonymous companies also have high levels of abnormally low electricity usage; an indicator for empty or underused homes.
Young people are moving out of London in record numbers due to the cost of housing. Over half of Londoners responding to our survey said wealthy overseas investors are causing house prices to rise and more than 1 in 5 believed money laundering was a motivating factor for overseas investment.
Transparency International UK warns that if these issues are not addressed, corruption abroad will continue to have a negative impact on the London housing market.
The report’s findings pose a problem for policy makers: how can you ensure the property market is not distorted by corruption overseas without unintentionally excluding innocent investors, many of whom might be seeking to escape from tyranny and instability in their home?
Transparency International UK makes the following recommendations to the UK government:
- Introduce greater transparency to the property market
- Reform the UK’s anti-money laundering system
- Retain tackling global corruption as a key priority
If these recommendations are followed, says TI UK, the negative impact overseas corruption inflicts on the people of London and its property market will be reduced and the UK’s role as a safe haven for illicit wealth will be diminished.
On the weekend of 12th-13th November 2016, hundreds of people with diverse backgrounds and interests gathered to talk about the issues surrounding land, and to look for spaces for solutions. This report summarises some of the sessions from the weekend. Thanks to everyone who submitted a session summary. We hope it can be useful for people who weren’t able to make it to the event, and will help inspire further discussions.
- 69% of land in the UK is owned by 0.6% of the population.
- UK housing is concentrated on 5% of the country’s land mass.
- Only 64% of people have a small stake in the 5% of land on which our housing is built.
- Home and land ownership is in decline.
- 1/3 of British land is still owned by aristocrats.
- The value of ‘dwellings’ (homes and the land underneath them) has increased by four times (or 400%) between 1995 and 2015, from £1.2 trillion to £5.5 trillion.
- The property wealth of the top 10% of households is nearly 5 times greater than the wealth of the bottom half of all households combined.
- Landlords own almost 40% of all former council houses with the government’s ‘right-to-buy’ scheme.
- The annual amount of overseas investment in the UK housing market has rise from around £6bn per year a decade ago to £32bn by 2014.
- 74% of house price increases between 1950 and 2012 in the UK can be explained by rising land prices with the remainder attributable to increases in construction costs.
- Land often increases in value due to public investment in infrastructure, such as roads, public transport, housing, etc. It has been estimated that the extension of the Jubilee Line of the London Underground which opened in 1999 increased local residential land values within 1000 yards of each of the stations by £13 billion (Riley, 2001). As a result, such publically funded infrastructure projects almost always involve a substantial transfer of wealth from a large number of taxpayers to a small number of land owners – a classic case of economic rent.
Who really owns Britain?, Country Life, November 2010.
Modern Land Reform, New Economics Foundation, publication forthcoming.
Who Owns Britain, Kevin Cahill, 2001.
As well as councils, private landowners also often sit on disused land that could be used for public good. Using the template below, you can put pressure on a local landowner to push them into putting their land to good use. Share it widely and do not hesitate in sending that email or letter!
Dear [insert name of landowner],
I am writing to you regarding [insert name of empty site] and its ongoing state of disuse.
As a local resident, I am keen that the site is brought back into use to the benefit of the local community. Our area is in need of [delete as appropriate: new housing, more green space, land to start a community food growing project] and the land that you own could be part of the solution. Bringing it back into use would be in your own interest as well as in the interest of the local area. I am not interested in purchasing or using the site myself – I am simply hoping to that it will be put to use in the near future.
I urge you to take the following actions:
- Contact the Empty Property Officer in the local authority to discuss what you can do to bring the land back into use.
- Make your intentions for the future use of the land known to local residents.
- Contact me or [name of active local group] if you would like to discuss how best to move forwards.
I look forward to hearing from you.
If you and a group of people around you have noticed disused land in your area and you think your council should be acting to do something about here’s how to let them know. Below is a template letter to send to your local councillor to let them know that local land should be used to the benefit of local people. Get emailing, reposting, sending letters and tweeting about it now!
Dear [insert name of councillor],
I am writing to you regarding disused land in the county/borough of [insert name of county or borough].
Our [borough/county] contains significant empty sites of empty land that could be used to build much needed housing, start new community food growing projects, launch new businesses, or create new wildlife corridors. The [insert example of disused land here] is just one example of this. As local residents we are keen to work with the local authority to ensure that this land is brought back into use to the benefit of local residents.
We would like to arrange a meeting with the relevant elected member and the empty properties officer to discuss the council’s strategy for bringing empty properties and derelict land back into use. To be clear, we have no interest in purchasing or profiting from any particular piece of land ourselves – we simply want to see the land in our borough/county used for the benefit of local communities rather than left empty.
Please let us know a convenient time for a meeting.
We look forward to hearing from you.
This simple step-by-step guide is designed to help you spot disused land in your area and raise it as an issue with your local council and local land owners – the people with the power to bring it back into use. Spotting disused land is easy to do and can be done be anyone. Currently, the UK has large amounts of disused land that could be put to use in all sorts of ways: from building community-led affordable housing, to growing community gardens, to increasing local biodiversity. Whatever your goal, this step-by-step guide will help you identify disused land in your area and bring it back into use, as well as potentially feeding into a crowdsourced map of disused land in the UK.
Who can spot land?
- Go solo! One person can achieve a lot. Decide on the geographical area that you want to spot empty land in. Decide how long a period you want to spend identifying sites – a week? a month? a year? Whatever time period you choose, the aim is to identify as many sites as you can within that time.
- Form a spotting group! This could be with your friends, family, colleagues, community group, or other people interested in land reform in your local area. The more people, the more disused land you will be able to identify. You could even meet up to share what you found out!
How to spot land?
You could spot land while:
- On your way to work
- Taking your kids to school
- On dedicated land spotting walks in your area
What to gather information on?
It is important that you gather information on:
- The location of the site. This is the most important piece of information. The best way to record the location of the site is to place a pin on Google Maps and save it. This data can then be used to create a map of disused land across the UK.
- How long the site has been disused. This might be something that you know yourself or it might be something you can find out by asking local people or through Google.
- Who you think might own it. Again, this might be something you know, or it might be something you can find out by asking the neighbours or through the Land Registry.
- What it used to be used for. Again, this might be something that you know yourself or it might be something you can find out by asking local people or through Google.
How to make it an issue?
Gathering information is important, but to bring disused land back into use it is essential to make it into a pressing issue: for the landowner (who has the power to do something with the land), the local authority (who has the power of compulsory purchase if the landowner refuses to take action), and local citizens (who have the power to put pressure on local landowners and the council). In order to make disused land in your area into an issue, you could start by:
- Taking a selfie in front of the disused land and tweeting it to #Land4What.
- Finding out who owns the land using the Land Registry.
- Telling your local councillors about all the empty land in your area and suggesting ideas for how it could be used (a community land trust housing development, a park, an allotment).
- Using the template letters to local councils and landowners on the Land for What? website: https://www.landjustice.uk/category/resources/
For more information on mapping land, check out the following links:
Who Owns England? – a blog attempting map land ownership in England.
Empty Homes – advice on how to bring empty homes back into use from a charity that campaigns on this issue nationally.
Plotfinder – a website for buying and selling land.
If you have not had a chance to browse this official Scottish Parliament document about land reform, I highly recommend that you do – http://www.gov.scot/Resource/0045/00451087.pdf
Just the introduction spelling out their remit is a beautiful stand alone piece of prose in its own right! I have taken the liberty of copying it below to save you a click and a scroll…
The relationship between the land and the people of Scotland is fundamental to the well-being, economic success, environmental sustainability and social justice of the country. The structure of land ownership is a defining factor in that relationship: it can facilitate and promote development, but it can also hinder it. In recent years, various approaches to land reform, not least the expansion of community ownership, have contributed positively to a more successful Scotland by assisting in the reduction of barriers to sustainable development, by strengthening communities and by giving them a greater stake in their future. The various strands of land reform that exist in Scotland provide a firm foundation for further developments. The Government has therefore established a Land Reform Review Group.
The Land Reform Review Group has been appointed by Scottish Ministers to identify how land reform will:
- Enable more people in rural and urban Scotland to have a stake in the ownership, governance, management and use of land, which will lead to a greater diversity of land ownership, and ownership types, in Scotland;
- Assist with the acquisition and management of land (and also land assets) by communities, to make stronger, more resilient, and independent communities which have an even greater stake in their development;
- Generate, support, promote, and deliver new relationships between land, people economy and environment in Scotland.
Once you find out about the way land is controlled you can’t believe there is so little debate about it. Land for what? is a chance to get more people engaged, says Tom Kenny.
Until a few years ago I didn’t really think about land much. Of course I was concerned about the housing crisis, the damage being done to the environment by industrial land management, gentrification, inequality and so on. But we rarely talk how these issues are all dependent on the way we use and govern land as a society.
When I did get interested, I quickly bounded down the rabbit hole. The more I learned, the more incredulous I got that the status quo is so rarely challenged, or even discussed. You keep having to pinch yourself….
“Let me get this straight – we pay landowners for owning land, sometimes even for managing it badly and destroying environmental assets!?”
“Wait a second, you’re saying that one third of our land is still in the hands of the aristocracy!?”
“So landowners make huge untaxed windfall gains when there is public investment in infrastructure near them? That doesn’t sound right…”
And when you get into it, It turns out a lot of people have been through this journey. We’ve had loads of interest since we started to talk about Land for What?. Interest from other people who have learned about the more absurd parts of the status quo, and are hungry to challenge it.
Yet it is still far from being a mainstream issue. Even where people are firmly entrenched in land-based struggles like housing activism they may not consider the importance of land to these struggles. Whilst it’s easy to fall down the land debate rabbit hole, most people seem not to notice it at all.
In the past, some discussions about ‘land reform’ have been alienating to outsiders (even the term is a turn-off for some). I think some people can get a bit lost down the rabbit hole, fixating on one of the particular paths. Planning policy. Land value taxation. Community Land Trusts. Yes, these things are important, but debates over their intricacies are rarely exciting for newcomers. Moreover, the core issues are much more basic, and should resound with most people in our society.
For me, Land for What? is about pulling many more people down the rabbit hole. It’s about spreading information about the nature of the problem, always relating it to the things people care about, and exploring common ground for solutions. It’s about inspiring other people to continue these discussions in their own communities.
When ideas about Land for What? were first gestating, some of us attended a talk by Scottish land rights campaigner (and now MSP) Andy Wightman. He said that a key step in the land reform debate in Scotland was when people developed ‘land literacy’, and the land debate was added to the list of topics people might discuss in the pub. Sounds like a good goal to me.
Quakers have an interest in Housing and Inequality which led us to run a conference on 20th February this year, a little while before the recent Housing Act.
If you’re interested in what went on, you can have a look at the open Facebook Group Quakers and Housing Inequality.
One of the outcomes following our conference was a Housing Toolkit, a resource document for use by Quaker groups and individuals. It might interest some of you, so I’ve uploaded a copy to this site here – Quaker Housing Toolkit Part 1