For those of you familiar with my regular updates, you will be aware that I have written much recently on the introduction of Unexplained Wealth Orders (UWOs) and the first UWO brought by the NCA against Zamira Hajiyeva. If you do not know what a UWO is yet, it is worth getting to grips with them as UWOs are set to transform the way in which the NCA pursues those suspected of illicit financial gains, whether those are obtained in the UK or elsewhere. They enable the NCA to seize UK assets from owners who the NCA reasonably suspects are involved in or connected to serious crime. To recover their assets, the owners must provide a satisfactory explanation of how the assets were obtained by lawful means. 

This post considers the importance of UWOs for overseas owners of UK property, and London property in particular. Allegations against the owners of UK property are common in the UK press; until recently, a London bus tour survived by taking tourists and locals alike on a trip around Knightsbridge, pointing out valuable properties and explaining their potential links to criminal wealth.

Although property prices in Knightsbridge have fallen considerably over the last few years, the prospect of acquiring valuable property is no doubt an attractive one. In the case of Zamira Hajiyeva, the NCA seized a Knightsbridge home worth £11.5m. A 2017 study by the University of York found that the average selling price of London property to overseas buyers exceeds £2m and there is an ongoing risk that any of these assets could be targeted. According to one property website, Rightmove, there are currently around 314 homes on offer in London with an asking price of £10m or more. Demonstrating source of wealth can be at best inconvenient and at worst a serious technical challenge for overseas buyers, particularly foreign buyers from less regulated jurisdictions. 

Considering the scale of this issue from another perspective, a 2016 investigation by Transparency International found that “suspicious wealth”, that which originates from individuals like foreign politicians appearing to live beyond their means, has funded £4.2bn of London property purchases. Conversely, in Transparency International’s annual international corruption index, the UK scores very highly (at joint eighth place). This invites questions on how we think about what “suspicious” wealth is and how it is calculated. One principle it is possible to derive from the UWO legislation is that wealth is suspicious unless it is proven otherwise. Proving a negative, that wealth did not come from illegitimate sources, can be very challenging. There does however appear to be a disconnect between the amount of suspect money flowing through the London property market and the UK’s very impressive record on corruption and transparency. 

Only in time will we see how this contrast is resolved. Perhaps much of this money will be shown under the UWO regime to be clean after all, or changing definitions of corruption will cause the UK to slip behind on international measures.