Dirty money linked to rising costs and reduced access for homebuyers
Money laundering through the UK’s property sector is contributing to higher house prices and making it more difficult for typical families to purchase homes, according to new research from SmartSearch.
The anti-money laundering and digital compliance solutions provider estimates that illicit funds entering the market have increased average property prices by approximately £3,000 nationwide, with the impact in London exceeding £11,000.
Since 2016, suspicious wealth totalling over £11 billion has been channelled into UK real estate, with more than half of these transactions involving shell companies registered in British Overseas Territories. Across England and Wales, over 87,000 properties are now owned by anonymous entities based in tax havens, with a combined estimated value of more than £100 billion. London is particularly affected, accounting for 40% of these anonymously owned homes.
“The UK property market is one of the most vulnerable sectors to financial crime, because of the high values involved and the ability for companies to buy, own, and sell property with minimal scrutiny,” said Phil Cotter (pictured right), chief executive officer at SmartSearch.
“This allows criminals to exploit loopholes—like purchasing through anonymous shell companies—to clean their money. These buyers often pay inflated prices to secure quick deals, which in turn distorts the entire market.
“In some prime areas of London, dirty money has inflated prices by up to 20%, pushing first-time buyers and local families out. In boroughs like Westminster and Kensington & Chelsea, offshore buyers have created so-called ‘lights-out streets’, where luxury homes sit empty while local communities suffer.”
Estate agents’ role under scrutiny
Estate agents are expected to play a key role in preventing money laundering in property transactions. However, SmartSearch’s analysis suggests that many agents are not meeting their legal obligations.
Recent enforcement action saw nearly 200 estate agents fined over £1 million for breaches of anti-money laundering (AML) regulations, mainly for operating without proper registration.
Data from the HMRC Supervised Business Register indicates that, out of nearly 25,000 VAT and/or PAYE-based estate agents in the UK, only 21,578 currently have AML supervision. A further 1,341 have applied but are awaiting approval, and 980 have allowed their supervision to lapse. This leaves around 3,400 agents—roughly 14%—operating without the required oversight.
SmartSearch’s research also found that more than half of AML-registered agents (56%, or nearly 11,000) do not always verify the individuals controlling business clients, leaving themselves open to transactions involving front companies. Additionally, 3%—about 650 agents—reported that they never conduct verification checks on business buyers.
“If estate agents don’t take their anti-money laundering responsibilities seriously, the UK property market will remain a magnet for dirty money,” Cotter said. “With thousands of agents still unregistered or failing to carry out even basic checks, we’re allowing criminals to distort the market—and it’s ordinary people who are paying the price.”
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