There is much speculation, although little hard evidence, of the influence of corrupt capital on the Vancouver real estate market generally, and on the escalation of Vancouver housing prices, in particular.  It is interesting, and perhaps educative, to look at a recent comprehensive study out of the UK, looking at these influences in relation to the London property market.

Research by lobbying group Transparency International claims to show that over GBP180 million worth of property in the UK has been bought with the proceeds of corruption since 2004 – typically ‘properties make use of offshore corporate secrecy to hide their owner’s identities’. The organisation quotes DCI Jon Benton, Director of Operations of the Metropolitan Police’s Proceeds of Corruption Unit saying: ‘The number of properties that we have identified as suspicious is very likely only the tip of the iceberg.’

In the Transparency International report, the following key statistics were identified:

  • £180m+ worth of property in UK have been brought under criminal investigation as the suspected proceeds of corruption since 2004. This is believed to be only the tip of the iceberg of the scale of proceeds of corruption invested in UK property. Over 75% of the properties under criminal investigation use offshore corporate secrecy
  • The average price of a property under criminal investigation in the UK is £1.5m. The minimum is £130,000, the maximum is £9m and the median is £910,000. 48% of properties investigated were valued at over £1m
  • 36,342 London properties totalling 2.25 sq miles are held by offshore haven companies. Of these, 38% in the British Virgin Islands, 16% in Jersey, 9.5% in Isle of Man, and 9% in Guernsey
  • Almost one in ten properties in the City of Westminster (9.3 per cent), 7.3 per cent of properties in Kensington & Chelsea, and 4.5 per cent in the City of London are owned by companies registered in an offshore secrecy jurisdiction. TI-UK has launched an interactive map of London which reveals the statistics for each borough –
  • In 2011 alone, £3.8bn worth of UK property was bought by British Virgin Islandsregistered companies
  • According to the latest figures, which cover October 2013 to September 2014, estate agents contributed to only 0.05% of all Suspicious Activity Reports (SARs) submitted. This figure does not match the risks posed by money launderers to the UK property market

While the scope of the problem may not be of the same order of magnitude, there are some lessons to be learned from this study, in relation to the Vancouver and other markets operating under the same influences.

The Transparency International report, can be found at Corruption on your Doorstep.