£22B Of London Real Estate Is Owned Offshore, Including Battersea Power Station And The Gherkin
The day after the Paradise Papers leak was made public, the Land Registry published a dataset containing details on every property in the U.K. owned by an offshore company.
An analysis by Bisnow highlights the extent of offshore ownership of London real estate — the majority of which is through tax havens.
Just over £22B of London real estate (and £36B of property across the U.K.) is owned by offshore companies, most through tax havens like Jersey, the British Virgin Islands and the Isle of Man.
Of that £22B, around half of the property is owned freehold, the other half leasehold. The figure could be much higher because the Land Registry does not have data for every property registered.
The City of Westminster, City of London and Kensington and Chelsea are the districts with the highest numbers of properties owned offshore.
British territories Jersey, Guernsey and the Isle of Man are the largest centres of offshore ownership that are defined as tax havens, followed by Singapore.
Owning property through an offshore company, domiciled in a tax haven or otherwise, is not illegal. But tax havens are used to minimise the amount of U.K. tax paid on a property, and there is a vigorous debate over whether their use is immoral, in that they reduce the taxes received by the citizens of a country, and their existence facilitates money laundering.
The Land Registry data does not break down the property by use class, but a review of the addresses shows the vast majority of it is likely to be residential property.
But there are some examples of very high-profile commercial assets and large development schemes that are owned in tax havens.
Battersea Power Station
Land Registry documents show that a company registered in Jersey, Battersea Project Land Co., bought the iconic Battersea Power Station and its surrounding land for £309M in 2012 from Lloyds Banking Group. As lender to the scheme, Lloyds had taken over the site when its previous owner, Irish company Treasury Holdings, defaulted on its loan. Treasury also owned the site through a Jersey-based company.
The scheme is owned on a 40/40/20 basis between Malaysian companies Sime Darby, SP Setia and Malaysia’s Employees Provident Fund, according to Sime Darby’s annual report.
A spokeswoman for Battersea Power Station said: “When the Power Station site was bought out of receivership in 2012, the Malaysian consortium chose to invest over £1B into the UK and in so doing create 20,000 jobs and inject £20B into the U.K. economy via a company based in Jersey.
“So far over £45M has been paid in various taxes to HMRC by the developer as a result of the regeneration of Battersea Power Station despite there being no profits realised up until this, the fifth of what is a 15-year programme of work on-site. The tax on future trading profits from this project will be paid in the U.K.”
The Gherkin is owned by a Luxembourg-registered company called Tower Properties. The building was bought by J Safra Sarasin, the private bank owned by a branch of the Safra family, for £726M in 2014. The building was previously owned by a joint venture between Evans Randall and IVG that went into receivership, and Land Registry documents show the title of the building was transferred from two U.K.-based companies to Tower Properties when the deal completed.
J Safra Sarasin did not respond to a request for comment on the ownership and tax structure of the Gherkin.
Tower 42 was bought by South African investor Natie Kirsh for £283M in 2011. Documents show it is owned by a Jersey-registered company, having been bought from three institutions — LaSalle Investment Management, Blackrock and Hermes Investment Management — which held it through a Jersey property unit trust.
Kirsh could not be contacted for comment.
As revealed by Bisnow, one of the office buildings housing Goldman Sachs in London, Peterborough Court, is owned by two members of the Qatari royal family: former emir Sheikh Hamad bin Khalifa bin Hamad bin Abdullah bin Jassim bin Mohammed Al Thani; and former Prime Minister Sheikh Hamad bin Jassim bin Jaber bin Mohammed bin Thani Al Thani, better known as HBJ.
Land Registry documents show the building is owned by a company called Fleet Street Investments II registered in the British Virgin Islands. Documents filed in Luxembourg show this company is owned by a Luxembourg company ultimately controlled by the two Qatari investors. It was bought for £265M in 2012 after it went into receivership.
The owners could not be contacted for comment.
Woolgate Exchange and the Walbrook Building
Taiwanese insurer Cathay Life made a big splash when it debuted in London with two City acquisitions totalling £900M. Documents show both Woolgate Exchange, bought for £320M in 2014, and the Walbrook Building, bought for £575M in 2015, were bought through Jersey-registered companies.
Cathay Life declined did not respond to a request for comment.