07/09/23

TAX AVOIDANCE: £40 billion worth of UK property owned by companies in offshore tax havens

As published on: todaysconveyancer.co.uk, Thursday 7 September, 2023.

 

A staggering £38.9 billion of UK property is held by offshore companies not subject to domestic tax laws, a new study has found.

This translates to some 80,460 homes in total. The British Virgin Islands hold £13.23 billion of the housing stock – 20,777 homes – though the biggest hotspot is Jersey, which has 21,602 properties.

A plethora of property is held by overseas companies not subject to domestic tax laws with a market value of £39.8bn – as firms based out of the British Virgin Islands hold £13.23 billion of the housing stock alone.

The research, which comes from property developer Stripe Property Group, found the next five biggest tax havens (value and volume) are Guernsey (£5.50 billion and 12,877), the Isle of Man (£4.49 billion and 10,393), Luxembourg (£1.07 billion and 2,446), Singapore (£908.13 million and 2,030), and Hong Kong (£851.09 million and 1.632).

In terms of tax havens where companies are freshly buying up property, the Cayman Islands tops the list. The number of properties owned by companies registered to the Caribbean-based British Overseas Territory has increased by 66 between August 2022 and August 2023, a jump of 4.8%.

In second place comes Ireland, with 4.4% more homes, followed by France, with a 4.2% increase.

At the other end of the spectrum, overseas ownership has fallen from companies in Bermuda by -19.5%, while there were major falls in Luxembourg and Malta, at -10.5% and -9.7% respectively.

By volume, the tax haven buying up the most property was Jersey at 568, followed by Guernsey at 306 and the Isle of Man at 125.

Despite its companies holding the most valuable stock, the British Virgin Islands lost the most homes year-on-year, with a -400 drop.

Managing Director of Stripe Property Group James Forrester commented:

“The government has failed in its remit of building enough homes to address the housing crisis and as a result, many potential buyers have seen their aspirations of homeownership pushed far out of reach due to record rates of house price growth in recent years.

So, they can be forgiven for feeling a tad aggrieved at the fact that there is a substantial level of homes owned by offshore companies located in tax havens.

Despite being located halfway round the world and not subject to domestic tax laws, companies in the British Virgin Islands own housing stock worth a staggering £13.23 billion.

While such practices are ‘legal’ under the letter of the law, you would think that the provision of housing stock for the domestic population would be the government’s first priority and they would curb the ability for such practices to take place.

In tough economic times such as these, they should at least make sure those who own property remotely pay their fair share to ensure they’re on an even playing field with domestic buyers, while also contributing to the tax coffers.”

Tags

Tax Avoidance UK Property Offshore Tax Tax Havens