Londongrad is falling down.
The U.K. has put the squeeze on wealthy Russians with measures aimed at the top slice of a London real-estate market already rattled by Moscow’s brutal invasion and sliding stocks, the Wall Street Journal reported. It froze assets tied to oligarchs who own London mansions and some lawmakers are calling for the government to seize and sell those homes.
That’s not all: It shut down a visa program that gave wealthy foreigners a quick path to citizenship and is introducing rules that make it harder for property buyers to stay anonymous, a feature that had made London attractive.
An even bigger risk for London’s high-end property market is the broad aversion to Russian money. If banks, brokers or sellers stop dealing with Russians, it could further stem the flow.
London’s high-end property market soared for two decades as the world’s ultra-rich poured money into safe bets in a stable country. Russians became a symbol of the rush of global wealth into the city. Prices surged and brokerages filled their offices with Russian speakers.
One mansion near Kensington Palace, on land leased from the monarchy, sold to an oligarch for $140 million. Russia’s new rich bought estates built by Victorian aristocracy and industrialists and added sleek glass walls and subterranean pools.
Transparency International, an advocacy group founded by former World Bank officials, says suspect sources have invested about $9 billion in U.K. property since 2016, $2 billion of which came from people tied to the Putin regime or other corrupt players.
Real-estate agents became used to cash purchases of multimillion-dollar homes by wives, children and associates through shell companies in Cyprus and the British Virgin Islands. More than 2,000 wealthy Russians entered the country since 2008.
The new sanctions will make sales of such properties near-impossible for now. Even managing the properties will be tough, because the asset freezes that prevent sales also prevents servicing them. That means hiring an emergency plumber to fix a leaky pipe now includes getting a license from the U.K. sanctions office.
[Wall Street Journal] – Dana Bartholomew