John Dobson is chief executive of SmartSearch
The property industry has lined up to welcome the Chancellor’s announcement of a temporary reduction in stamp duty.
The property market is a key engine of growth in the UK economy, so it is to be hoped that it succeeds in its aim of stimulating the market, encouraging first-time buyers to get their foot on the ladder, and those who were thinking of moving to bring those plans forward.
There is a risk, however, that a short-term fix of this nature will also attract a different class of prospective buyers altogether: professional criminals looking to launder the proceeds of their crimes.
The property market is already an attractive target for money-laundering, enabling large quantities of ‘dirty’ cash to be ‘washed’ through a single high-value transaction.
Announcing that for nearly nine months there will be no stamp duty payable on the first £500,000 of a purchase is akin to calling open season on this.
That’s not to say the stamp duty holiday is a bad idea; but it does mean that brokers, estate agents, conveyancers and lenders all need to be especially vigilant in order to avoid falling victim to or unwittingly aiding in this sort of criminal activity. If the policy has the desired effect, everyone’s going to be busy dealing with high volumes of customers looking to take advantage of the temporary reduction while it lasts.
The end date next spring coincides with the introduction of significant restrictions on Help to Buy, and there is already some evidence that people looking to use that scheme are coming forward in greater numbers to beat the deadline.
Although the ‘lockdown’ restrictions have been eased, there is still a strong presumption against unnecessary face-to-face meetings, and if there are high volumes to deal with, onboarding these customers while complying with due diligence requirements is going to be a challenge.
The answer is to streamline and automate the process. Digital KYC and AML processes can deal with as many as 95% of cases in just a few seconds – and flag up clearly where further attention is required.
The Stamp Duty holiday ought to be a significant boon to the industry – as long as everyone concerned is aware of the potential for criminal activity, and acts accordingly.