Some 97,000 properties in England and Wales were held by overseas firms as of January 2018, a quarter of them owned by entities registered in the British Virgin Islands (BVI), according to Land Registry data.
Two thirds of these properties are registered to firms in either the BVI or in Jersey, Guernsey and the Isle of Man, while a significant number are owned by companies in Hong Kong, Panama and Ireland.
HM Land Registry has only been collecting this information since October 2013, so information on properties sold overseas before then is not included in these figures. Moreover, the Land Register only shows the name of the company and its territory of incorporation, not transaction values. Even this data was not available until a decision was taken last November to put it in the public domain. The January figures are thus the first to become available.
Nearly half of all foreign-owned properties are in London, the Land Registry figures show. Its numbers are backed up by HMRC figures for the Annual Tax on Enveloped Dwellings. These show that nearly 80 per cent of the UK's corporately-owned residential property (whether foreign-owned or not) are in two London boroughs, of Westminster, and Kensington and Chelsea. About 6,000 properties in these boroughs are owned by foreign companies. Even the Admiralty Arch is owned by a Guernsey company, it has emerged.
The considerable level of foreign ownership of London prime property has given rise to suspicions that it is used to launder the proceeds of government or business corruption abroad. However, there have historically been good legal reasons for non-resident persons to hold UK residential property via an offshore company. For example, such properties were not liable for UK inheritance tax until the law was changed in April 2017. Going back further, they were also not, in practice, liable to stamp duty, because they changed hands through the sale of shares in the corporate vehicles that owned them.
The government has confirmed that a beneficial ownership register of foreign companies that own or buy UK property will go live in early 2021. Draft legislation is to be published this summer by the Department for Business, Energy & Industrial Strategy (BIS).
Click to read Annual Tax on Enveloped Dwellings (ATED)