Russian property sanctions will only hit prime central London

A leading surveyor in London says the likely introduction of a register of overseas property ownership and sanctions making it difficult for Russians to purchase property in the UK will hurt only prime central London’s housing market.

The rest of the property industry will be unaffected predicts Hannah Munn, a senior surveyor at London-based Copping Joyce, an independent multi-practice firm or surveyors and valuers.

She says: “Russian businesspeople accused of corruption or links to the Kremlin own at least 150 properties worth £1.5 billion, so investigations into ownership of London properties could lead to a substantial volume of wealth moving out of the UK. 

“London has long been considered a safe-haven for capital, with the acquisition of real estate assets providing a channel for money laundering. A register of overseas property ownership is the first step in cracking down on illegal activity - I expect we will see a fall in demand from Russian buyers, but it will be largely isolated to the prime central London market.

“A fall in Russian buyers is unlikely to have a material impact on prime property values in London. 

“Back in 2014 there was a substantial amount of Russian money in London, however the UK then increased the cost of its ‘golden visa’ programme, tightened anti-money laundering rules and introduced stamp duty changes, which penalised overseas buyers in the most expensive property markets.

“Russians are no longer among the major buying groups in London. Figures from the Land Registry show just 1,127 properties are owned by a company with a Russian correspondence address - less than a 20^th of the number of titles owned by companies based in Hong Kong.”

The campaigning organisation Transparency International estimates that 100 London properties worth £1.1 billion are owned by Russians accused of corruption or links to the Kremlin.

It is thought by some that a lack of transparency over identifying the legal and beneficial ownership of companies and properties could be aiding offences such as tax evasion and money laundering, as well as hiding the assets of those who would come under any sanctions.

The agents trade body Propertymark has long supported proposals for transparency of ownership through a public register to go hand in hand with Money Laundering Regulations, to avoid criminal funds being concealed, and has made suggestions to the UK government on how this could best be implemented.