Saturday, Jul 25, 2015

Ello' ello' ello' what's all this going on ere then ?

BBC: Foreign criminals 'driving up UK house prices'

Foreign criminals are laundering billions of pounds through the purchase of expensive properties, which is pushing up house prices in the UK, the National Crime Agency has said. Its economic crime command director, Donald Toon, told the Times that London prices had been "skewed" as a result. He said prices were being artificially driven up by criminals "who want to sequester their assets here in the UK".

Posted by jack c @ 10:41 AM (5534 views)
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5 Comments

1. quiet guy said...

As I posted my blog entry following this one, I couldn't help but think that it's rather convenient for some people at Threadneedle street for our housing woes to be blamed on foreign criminals.

Saturday, July 25, 2015 01:14PM Report Comment
 

2. icarus said...

Full details - including links - at

http://www.transparency.org.uk/news-room/12-blog/1231-case-for-ending-offshore-corporate-secrecy-the-uk-property-market/1231-case-for-ending-offshore-corporate-secrecy-the-uk-property-market

Saturday, July 25, 2015 02:02PM Report Comment
 

3. bidin'matime said...

The impact of this is so much greater than even the National Crime Agency would admit: the impact on top-end house prices feeds all the way down, as London sellers pay over the odds for houses in the suburbs - giving those vendors cash to pay over the odds for houses in the country, etc etc.

This general increase in prices then gives lenders the false impression that property values generally are higher than they should be, resulting in a greater readiness to lend on all property. This greater lending leverages up the criminal money, pushing up all property prices nationwide. And so the valuations appear justified and the lenders keep lending more.

The principle is well understood in macro-economics as the multiplier effect (eg when talking about government spending) - where a sum of money will trigger spending of many times that sum as the same money changes hands many times: this foreign money has boosted the UK housing market - and through it, the UK economy - far more than anything the government could raise.

But the downside is that with the money supply in the hands of foreign criminals, it makes the UK economy extremely unstable - and unless HMG has plans to re-introduce exchange controls (abolished in 1961) to restrict outflows of funds from the country, we face turbulent times when the tide turns.

Saturday, July 25, 2015 08:15PM Report Comment
 

4. icarus said...

@3 - sounds like the Ponzi end of the 'multiplier effect' spectrum.

Sunday, July 26, 2015 09:07AM Report Comment
 

5. Rayman740 said...

Why is the emphasis on 'foreign', can't home ground criminals cut mustard any more? Another sign that GB is slipping .....

Monday, July 27, 2015 01:45AM Report Comment
 

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