How foreign investment firms exploit the UK property market with leasehold ground rents
The government plans to reform the leasehold property system in the UK. Communities Secretary Sajid Javid said: “These practices are unjust, unnecessary and need to stop.” * Around 4 million – or 21% – of privately owned properties in England are leaseholds.
LONDON — England is one of the few places where you can own your own home and still have to pay rent.
But that could be about to change.
So begins an excellent article on Business Insider by Thomas Colson.
It quotes Direct Line for Business saying that ground rents average £371pa on new-builds and £327pa on older housing stock.
“A lot of these freeholds are owned offshore, and most are owned by interests which hide their beneficial ownership behind nominee directors,” it quotes LKP trustee Sebastian O’Kelly. “Why is so much of this smoke-and-mirrors behaviour felt necessary in this sector?
“The truth of the matter is, owning the freehold to a block of flats — or a portfolio of leasehold houses — is a brilliant way of hitching a ride on the UK residential property market. If you can do so anonymously, and off-shore, all the better [for them].”
“It’s an utter disgrace that £260 billion worth of residential and commercial UK property is owned offshore where the ultimate beneficial ownership is hidden,” he said. “I don’t think a democracy can function with that scale of evasion.”
“It’s about social responsibility as much as anything else. It’s a huge chunk of the nation’s wealth. You cannot have this amount of wealth owned by people about whom we know nothing.”