Is our housing market built on dirty cash?

The state of the UK housing market is something that gets a lot of press. We’ve blogged before about the lack of affordable housing and only last week we were looking at the influx of corporate rentals and foreign students who have pushed up the prices for a two bed flat in some of the most desirable areas. However, we were surprised to learn this week that the overinflated housing market that causes us all so many issues in this country might actually be due, in part, to a degree of criminality.

If you’re wondering what house buying has to do with the UK rentals market then it has a very direct effect on your experience as a UK renter. For one thing, the shortage of properties that are priced for first time buyers has meant that more people continue to rent for longer, increasing the number of tenants while the pool of properties and landlords remains roughly the same. It’s this element of competition that often pushes prices up and encourages landlords to let standards slip on the basis that there will probably be another tenant ‘along in a minute’ who is willing to put up with the damp/cold/poor interiors that the other tenant was not happy with.

It’s for these reasons that we keep a close eye on stories about the housing market here at The Tenant’s Voice and so when we saw the report about dirty money being laundered through the UK property market we thought we ought to share it. You may or may not have seen the Channel 4 documentary ‘From Russia With Cash’ this week, which was basically about this idea. Essentially, the story here is that billions of pounds of money that has been obtained through corrupt means has been made legitimate by being used to purchase property in the UK. High end properties have been bought through anonymous offshore front companies and the purchases kept secret – given the vast sums of money involved this could well make the UK one of the world’s capitals of money laundering.

And how does the purchase of expensive property have any effect on those who don’t have millions to spend? Well industry experts have said that it is likely that this influx of bad money is having a “widespread ripple effect down the property price chain and beyond London.” So, for every corrupt foreign buyer who uses their ill gotten gains to snap up a bijoux pad in Chelsea or Notting Hill, there’s another couple of first time buyers who can’t get on the property ladder and another swathe of renters who see their rents go up and their landlords get more complacent. That’s probably over-simplifying the situation but it’s important to recognise the connection between allowing these kinds of transactions and making the housing market a healthier place.

At The Tenant’s Voice we want a better rentals market and that means a health check for the UK housing market in general. Otherwise, basic renting standards could very soon be out of reach unless you can afford it.

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