The politics of foreign property ownership
The issue of housing is already showing itself to be key in the run up to local elections this year. Faced with the prospect of Labour gains, the recent government announcement of a new public register of ultimate owners of UK properties is both an attempt to push through legislation ahead of the EU withdrawal, and to show that government is thinking about issues other than Brexit.
The Minister for Small Business, Consumers and Corporate Responsibility, Andrew Griffiths recently announced the establishment of a new public register – the ‘Overseas Entity Beneficial Ownership’. Beginning in 2021, the register will require overseas companies that own or buy property in the UK to provide details of their ultimate owners.
Ownership of UK properties by non-UK entities has been a key theme of discussions during the stages of the Sanctions and Anti-Money Laundering Bill. Indeed, Lord Faulks QC (Con) put forward an amendment to insert a new Clause to establish a “public register of beneficial ownership of UK property by companies and other legal entities registered outside the UK”. The amendment was withdrawn following an announcement during report stage that the government will produce a draft Bill to establish such a register, which was then confirmed by Andrew Griffiths.
Plans for such a register have been a subject of discussion for various years, particularly following the leaked Panama Papers in 2016.
The timing of the announcement is not simply an attempt to avoid another potential defeat in the Lords over the Sanctions Bill, but also an awakening to growing public discontent over empty properties in London amidst a housing and homelessness crisis. Foreign ownership was also in the spotlight following the Grenfell Tower fire.
There are both political and practical challenges facing the government. Politically, whilst there may be some support for greater transparency on ownership, the government knows that foreign investment in property and development is vital. On a practical level, ownership is complex. Take foreign pension funds as an example – should all the members of the fund be registered, and why anyway would we consider this kind of institutional investment to be a bad thing? History shows that laws made in response to newspaper headlines are rarely good laws, yet the ‘something must be done’ pressure on the government will not go away.