It probably seemed a good idea to Sajid Javid, the business secretary, just before Easter to sneak out an announcement that the Land Registry should be sold off.
The aim is to reduce government debt – the Leasehold Advisory Service, anyone? – which is odd as the Land Registry actually makes money.
Then this week we have had the massive data leak about Mossack Fonseca, and whole murky world of offshore finance has come under the spotlight.
It is an issue of considerable relevance to all leaseholders, but particularly those in retirement leasehold whose freeholder is Vincent Tchenguiz, whose interests are held in a network of companies – in “quasi-biblical complexity”, according to one judge – that are ultimately controlled by his Tchenguiz Family Trust, supposedly based in the British Virgin Islands.
At least in Tchenguiz’s case, owing to his and his brother Robert’s wrongful arrest by the Serious Fraud Office in March 2011, there is some public knowledge of his affairs.
Staggering amounts of residential and commercial property in the UK are owned by offshore entities. It amounts to £263 billion since the year 2000, according to Property Week magazine.
Private Eye, which has been making the running on this story, puts the total at slightly less.
Both publications are analysing the database of the Land Registry. The data shows that after Jersey, with £85 billion of property assets, the British Virgin Islands is the second largest single source of cash with £50 billion.
The money from these sources is secret for a very good reason: it is either the proceeds of crime, or it is being hidden to avoid tax.
It is, however, making utter fools of the rest of us who attempt to make society work.
The ultimate beneficial owner of all property assets in this country ought to be known, and the information publicly available.
It is absurd that home owners in, for example, the Post Box in Birmingham, when fighting for a right to manage application, cannot know who their freeholders are because Post Box Ground Rents Limited is registered in Guernsey.
British property is also awash with dirty money.
“A combination of factors mean that we will never know exactly how much criminal money is being laundered through the UK market,” a National Crime Agency spokesman is quoted in Property Week.
“These factors include the hidden nature of the problem, the intermingling of legitimate and illegitimate funds and the lack of transparency in some source countries.”
David Cameron is supposed to be cracking down on the murky offshore world and demanding greater transparency – that exhausted word again – for Britain’s “treasure islands” of offshore tax havens.
But then the documents leaked from Mossack Fonseca reveal that his late father, Ian, used bearer shares – one of the most secretive tools of the offshore trade – after he helped set up Blairmore Holdings, a fund for investors.
Whenever Ian Cameron wanted to attend a board meeting, he had to fly to either Switzerland or the Bahamas to ensure the investment fund wouldn’t have to pay any UK income tax or corporation tax on its profits.
The prime minister could also draw on the expertise of his brother-in-law William Waldorf Astor, heir the viscountcy, for advice on the value and importance of residential freeholds.
He was a protégé of Vincent Tchenguiz for whom he worked, and through his company Long Harbour has built up a £700 million freehold portfolio. It includes a chunk of his fallen mentor’s assets.
So given the mine of information about dubiously owned property assets in the Land Registry, should it be sold off and who could be trusted to buy it?
Leaseholders would understandably be anxious about issues such as the registration of their lease extensions. There is also the question of vast tracts of unregistered land, which would inevitably encourage temptation.
The monetising possibilities of a privatised Land Registry are too appalling for the suggestion to be considered seriously. Yet Conservative ministers are re-addressing it for a second time. Why is that?
All in all, sensible people will blow a loud raspberry at Sajid Javid’s proposals to flog it off.
Related posts:
Land Registry sell-off is shelved (for the moment)
Huw Merriman calls for zero ground rents for retirement leasehold at prime minister’s questions
Land Registry publishes new data on leasehold and fleecehold deals to help buyers and nudge Rightmove
McCarthy and Stone says ground rents essential, but why sell freeholds to murky Adriatic Land?
Beware ‘MacDUFF’ Scottish consumer-friendly land laws, say freeholders in lobbying report to save their incomes
Queen Court RTM halts central London basement conversion
Amazing really, they can’t agree on anything to do with Leasehold reforms, but the mention of a profit on anything to do with property and they will work overtime!!!! double standards?
My own development was owned by someone connected/family to a prominent government figure, who had his name taken off anything to do with the offshore company where the asset is held…. Did he see this coming? I wonder!
Anyone who doubts that the private sector can and frequently does tend toward ruthless monetisation, rule bending and out and out corruption need only read a few of the books that have been written about the great financial crash of 2008. Shredded by Ian Fraser. Fool’s Gold by Gillian Tett. The Big Short by Michael Lewis. etc.
This is not a case of the government wanting to unload an inefficient service that is competing with natural rivals making more effective use of technology, as could be said of the Royal Mail. It looks like a soft target for right wing ideologues who would like, as Grover Norquist in the US put it, shrink the government until is was small enough “to be drowned in a bath tub.” It could also be, of course, a delightfully corruptible little enterprise. For a price, properties could be flagged so that they don’t appear in the public register. A two tier system could be both a nice little earner for the shareholders and greatly facilitate the desire of some of the richest to avoid or reduce scrutiny. What could possibly go wrong?
A glance at the scams of RBS whose inadequate regulation has cost the taxpayer tens of billions of pounds might be instructive. The list of crimes and consequences of incompetence is long:
Mis-selling of financial products (PPI, mortgage backed securities), collusion with other banks in the credit default swaps markets, rigging of market benchmarks (Libor, foreign exchange rates and others) and more, much more — forcing businesses into special measures in order to seize their assets to help pay for all this, and all the while paying huge bonuses even while losing money.
What a great idea — to take a small self-funded service that is a model of integrity and let the wolves have it.
The ostensible justification is laughable and transparently dishonest. If the government were as concerned about debt as they profess to be there are many more financially meaningful things that could be done. It appears that the government is ambivalent about the fact that London is a home for dirty money. It likes the revenues that flow in from stamp duty that is the proceeds of crime and corruption the world over but the impact on asset prices is making life intolerable for the ordinary UK taxpayer so SOMETHING must be done — but nothing too drastic, because… friends and donors.
The Conservatives need to smell the coffee and accept that they have a choice: real reform or a revolution–one that includes the abolition of leasehold. The longer they delay the more explosive the revolution will be. Happily there a few with conspicuous integrity, Peter Bottomley most notably.
A relevant quote from a 2014 profile of William Gibson anticipating the Panama crisis
“One of London’s roles today seems to be to be the natural home of a sometimes slightly dodgy flight capital,” Gibson observed. “It’s where you go if you successfully rip off your Third World nation. And there’s a huge industry of people there who are just there to facilitate that move, if you’ve got the readies. I can’t help but think that that will eventually come back to bite somebody’s ass, although it may well be your grandchildren’s.” Gibson told me that when he visits London, he’s struck by the extent to which overseas money has warped the fabric of the city, but even more so by “the denial of my lifelong Londoner friends. Some people just don’t seem to see that there’s anything happening to it, even though it seems to me to be such a radical change. It amazes me when people argue: ‘Oh, it’s only happening in that neighbourhood, and if that’s no longer fun we’ll just move.’ I thought that was what the developers wanted you to do so you can gentrify the next bit.”
Source: http://www.theguardian.com/books/2014/nov/16/william-gibson-interview-the-peripheral
Gibson is the originator of the term cyberspace (in 1984) and one of the greatest writers of science fiction — an astute observer as well as a far-sighted visionary.
Watching the Channel 4 programme ‘Millionares Mansions’ highlighted to me the obscenity that is the housing market at present and the reason nothing will change anytime soon!!
You saw the earlier Channel 4 programme featuring a bogus Russian (a Ukrainian with enough of an accent to pass, complete with young blonde wife) who privately admitted to property agents that he had stolen money from his government’s health dept and would need help with laundering the money? From Russia with Cash: http://www.channel4.com/programmes/from-russia-with-cash
ALL of them said, in effect, “no problem Sir”. (As in, officially that’s out of the question but a “very good” lawyer could find a way).
As has been pointed out on Twitter today:
In 2013, Cameron lambasted the “travelling caravan of lawyers, accountants & financial gurus” behind tax avoidance. https://t.co/wztn63TuRB
Here’s an extract from the speech.
Again let me put my cards squarely on the table. Of course there is a difference between tax evasion and tax avoidance. Evasion is illegal. It can and should be subject to the full force of the criminal law. But what about tax avoidance? Now of course there’s nothing wrong with sensible tax planning and there are some things that governments want people to do that reduce tax bills, such as investing in a pension, a start up business or giving money to a charity. But there are some forms of avoidance that have become so aggressive that I think it is right to say these raise ethical issues, and it is time to call for more responsibility and for governments to act accordingly.
In the UK we’ve already committed hundreds of millions into this effort, but acting alone has its limits. Clamp down in one country and the travelling caravan of lawyers, accountants and financial gurus will just move on elsewhere. So we need to act together, including at the G8. If there are difficult questions about whether existing standards are tough enough to tackle avoidance we need to ask them. If there are options for more multilateral deals on automatic information exchange to catch tax evaders we need to explore them.
The interior designers are the gilding on the caravan!
Simon Jenkins’ verdict on Cameron is fair — innocent as a taxpayer, guilty as a legislator (http://www.theguardian.com/news/commentisfree/2016/apr/08/david-cameron-tax-lawmaker-panama-papers).
Jenkins overlooks the conflicts of interest and the connections of Conservative fundraisers and grandees, many of whom are richly versed in legal means of tax avoidance using jurisdictions such as the British Virgin Islands. I would add “and a crony” to Jenkins’ verdict.
Just imagine what a leak from the BVI would reveal. The Panama papers originate from and could fit on a single hard drive of the email system of a single law firm in Panama.
I think they may have abandoned the idea, (or at least put it on hold) it was met with public outrage and the Panama papers did not help.
This is capitalism “gone mad”; Only in Britain (and perhaps under a Tory Government) such proposal could be made in public; The idea of privatising (even parts) of the Land Registry is as outrageous as privatising the DVLA or the issuance of Birth certificates; The property Finance lobby be stopped.
Private Eye Nr 1416 has a feature “Cash Registry” (p.7) which begins
“No sooner had the last Eye gone to press, revealing the Land Registry’s plan to frustrate a supposed move toward transparency by charging thousands of pounds for information on offshore companies holding property, than business secretary Savid Javid said the organisation would be privatised.”
I was unaware of this when I suggested, rhetorically, that a two tier system would result from privatisation.
Reportedly, when users of the service were surveyed 91% felt that privatisation would not enable it to be more efficient or effective.