Today is the United Nation’s World Habitat Day. The theme for 2017 is Housing Policies: Affordable Homes.
First celebrated in 1986, it’s intended ‘to reflect on the state of our towns and cities, and on the basic right of all to adequate shelter’ and ‘to remind the world that we all have the power and the responsibility to shape the future of our cities and towns’.
Ensuring affordable housing is an increasing concern in countries and cities around the world. Cities with affordability issues exacerbate inequality and exclusion.
When people cannot afford to live in a city, they can be forced into other housing options. These have their own issues, such as isolated locations, distance from job opportunities and informational solutions with insecure tenure. Adequate housing on the other hand has an important part to play in economic development, employment generation and the reduction of poverty.
The drivers behind unaffordable housing are complex and multi-faceted. However one aspect that should be considered is the role of illicit funds being used to purchase property in cities around the world.
The role of dirty money
In March 2017, Transparency International (TI) released the reportFaulty Towers: Understanding the impact of overseas corruption on the London Property Market.
It is clear that the UK – in particular London – is facing a housing crisis. According to the TI report, in inner London, the average house price is ten times the average salary. Outer London doesn’t fare much better, where the average house price is nine times the average salary. Key contributors to the housing crisis are thought to be the supply of affordable housing and social housing – put simply not enough homes are being built.
Research has indicated that ‘periods of intense investment have a measurable and direct impact on house prices’ throughout London. Although it is true that property transactions that involve corruption target the high end of the property market, it is believed that this as a ripple effect through the rest of the market. As one area becomes unaffordable for a demographic, they will look to move into surrounding areas, which in turn increases the house prices in that new area.
In addition, as demand for luxury property increases, property developers shift their priorities to developing more luxury flats and houses. This takes away from the space and the resource that could create more affordable housing.
London – a safe haven?
We have recently seen more scrutiny on overseas investment in the London property market, with the Mayor of London Sadiq Khan launching an inquiry into foreign ownership in London, saying ‘Londoners need reassuring that dirty money isn’t flooding into our property market’.
However the high price of property doesn’t deter a criminal; if anything it gives them the opportunity to launder more money.
Unfortunately London is being seen increasingly as a safe haven for those looking to launder their illicit wealth, including corruption. Laundering money through property is attractive for criminals, also acting as a store of value. So long as London property is considered a safe investment, corrupt officials will try to launder their dirty money through the market.
Whilst this article has highlighted the potential role of corruption in the UK housing market, this has the potential to impact all cities around the world. TI also issued a report which looked at the role of corruption in four property markets: Australia, Canada, US and the UK.
Corruption is all-pervasive, impacting all parts of the world and disproportionally affecting poorer communities. It is estimated in Africa alone, $50 billion is lost annually to illicit financial flows; money that is intended to help some of the most vulnerable communities. In Zimbabwe, corrupt officials were reported as buying property and then selling it to families desperate for homes – for up to ten times its market value.
Ensuring that we play a role in the fight against corruption remains of vital importance.
Across the world existing anti-corruption legislation is being revised and strengthened, new legislation is being promulgated and even laws enacted in other countries can have a direct impact on your organisation. Citizens around the globe are demanding that their political leaders be held to a higher standard of ethical conduct.
The extent of the challenge facing legislators and leaders in the public and private sectors requires that the problem of corruption is approached from a multi-disciplinary perspective.
This means that it is critical to understand the field of anti-corruption and the ICA Certificate in Anti-Corruption will offer specialist knowledge that sets you apart from your peers and positions you to contribute positively in an area of significant global concern.
Find out more > /qualifications/cert-anti-corruption/