Cyber attack on London councils stops tax revenue reaching Treasury

Share

A crippling cyber attack on three of London’s wealthiest councils is threatening to block billions in tax revenue from reaching the Treasury.

The co-ordinated strike has paralyzed IT systems across the Royal Borough of Kensington and Chelsea, Westminster City Council, and Hammersmith & Fulham. By halting mandatory local authority searches, the attack has effectively frozen the property market in areas where home prices are among the highest in the world.

In the 2024-25 tax year, these three boroughs generated approximately £1.5 billion in stamp duty. With hundreds of sales now stalled or collapsing, experts warn that a significant portion of this revenue is being diverted from government coffers.

The crisis began in late November when hackers breached the shared IT infrastructure. While Westminster has attempted to process applications manually, Kensington and Chelsea admitted that hundreds of planning applications and land searches are now “in limbo.”

Mortgage lenders typically refuse to release funds without the results of these municipal searches. Consequently, purchase and remortgage transactions have ground to a halt. Legal experts at Farrer & Co confirmed that the ongoing delays are preventing many high-value deals from proceeding.

The impact extends beyond the Treasury to local residents. Homeowners planning renovations have been told they may wait months for approval, while major developments – including thousands of new homes – face significant delays.

Developers warn that the inability to “discharge” planning conditions is causing costs to spiral. There are also fears that some builders may press on illegally, leading to a surge in planning breaches that the councils are currently unable to enforce.

Kensington and Chelsea has already reported a direct loss of £200,000 in land charge income. To keep the market moving, officials are considering asking lenders to accept indemnity insurance instead of official searches, a move that carries its own legal risks.

Cyber security teams from the Metropolitan Police and the National Cyber Security Centre are currently working to restore the networks. However, officials warn that systems are being brought back “very cautiously,” and a full recovery could take months.

For latest tech stories go to TechDigest.tv