24 Jun 2020
Foreign companies own £4.4 billion worth of Scottish property, The Ferret can reveal, leading to calls for greater transparency to stop Scotland losing out on tax revenue.
Concerns have also been raised about the need for urgent action to stop criminals using opaque foreign companies to invest in Scottish property as a front for money laundering.
Registers of Scotland data obtained by The Ferret shows that on the last day of 2019, 3,237 Scottish properties were owned or leased by companies based outside of the UK.
The companies buying these properties paid a total of £4.42bn for them. They are likely to be worth even more than that today.
Further Ferret analysis shows that about 60 per cent of foreign owned property was bought by companies based in tax havens, allowing them to avoid paying tax. These 1,851 companies paid £2.76 billion for the properties.
The National Crime Agency stressed that as the UK property market is seen as a stable investment, Scottish property is sought after by legitimate investors. However it also warned that it could also be used to “launder the proceeds of crime”.
Campaigning organisation, Global Witness, said that previous investigations had shown how “the criminal and corrupt” stash dirty money in property, while hiding their identities behind anonymous companies. It called the figures revealed by The Ferret “deeply concerning” and said it highlighted the need for greater transparency.
Offshore-owned properties are located all over Scotland, from Shetland to Gretna and from Skye to Peterhead, according to the data.
According to the data, another postcode with a lot of these properties is PA3 3. This is due to a controversial car park investment scheme near Glasgow airport. Many of the parking spaces are leased to foreign companies.
The council areas with the most offshore property are Glasgow and Edinburgh, with 592 and 516 properties respectively, followed by Aberdeen (227), Renfrewshire (182) and South Lanarkshire (181). Renfrewshire’s properties include 53 from the airport car park scheme.
A spokesperson for the National Crime Agency told The Ferret: “UK property is a high value commodity, which is typically seen as a stable investment. As such, property is an asset which is sought not only by legitimate investors, but also by criminals and corrupt politically exposed persons to use as a vehicle to launder the proceeds of crime.”
The spokesperson continued: “This is often done through the establishment of complex corporate structures, including the use of so called ‘secrecy jurisdictions’ to further obfuscate the true ownership of the properties.”
Ava Lee, from anti-corruption campaign group Global Witness said: “For years our investigations have exposed how criminals and the corrupt launder and stash dirty cash in property, while hiding their identities behind anonymous companies. It is deeply concerning that no one – not even the government – knows the real owners behind £4.4 billion worth of Scottish property.”
Rachel Davies Teka, head of advocacy at Transparency International UK, said: “The UK’s property market is a prime destination for criminals and the corrupt to launder their stolen wealth. Owning property via an overseas company doesn’t automatically indicate wrongdoing, but when that company is incorporated in a secrecy jurisdiction like the British Virgin Islands it is extremely difficult to establish who really owns it.”
Teka added: “Using anonymous shell companies registered overseas is a common way in which corrupt individuals use their dirty money to purchase luxury property in the UK. This anonymity enables them to enjoy their ill-gotten gains with impunity, and sees much needed housing used as a personal safety-deposit box.”
Both Teka and Lee called on the UK government to urgently introduce a long-awaited register of who owns UK property.
The government has been promising to do this since 2016 when then Prime Minister David Cameron said he would introduce it by 2018. The current government says it will be introduced by 2021. In February 2020, they said it will be put to parliament “when parliamentary time allows”.
The Scottish government is also drawing up plans for a register of Scottish property. If the UK government introduces one first though, it will re-consider whether this is necessary or not.
In a 2018 report, the UK parliament’s Foreign Affairs Committee said that money laundering is a foreign policy issue and it should “form a central aspect of Government strategy towards hostile regimes” including that of Russian President Vladimir Putin.
Edinburgh South Labour MP, Ian Murray, is one of the committee’s members. He told The Ferret: “What matters here is the potential loss of tax revenues to Scotland’s economy. The hard work carried out to make Edinburgh an economic success story should not lead to money being sucked offshore to secretive tax havens, restricting what is spent on the local economy and our cash-strapped NHS.”
International charity Oxfam has been campaigning for the EU to operate a fuller blacklist of tax havens.
Jamie Livingstone, head of Oxfam Scotland, said: “Tax havens allow wealthy individuals and big businesses to avoid paying their fair share, depriving governments of crucial money that could fight poverty and fund vital public services like schools and hospitals. Progress in tackling this issue has been too slow and must now accelerate if the recovery from Covid-19 is to be just, caring and green.”
Livingstone added: “Scotland should have no desire to be linked, in any way, to tax avoidance and greater transparency is urgently needed to make sure that any wrongdoing or tax avoidance is exposed and stopped.”
John Christensen, director of the Tax Justice Network said that foreign investment in residential property adds little to the economy and drives up property prices.
He added: “Estate agents are notoriously weak at checking the identities of offshore clients, so anti-money laundering checks are seldom applied. In many cases investors from other countries buy property in Britain to evade taxes due elsewhere, for example wealth taxes, inheritance taxes, and others.”
By Joe Lo, The Ferret, 21 June 2020
Read more at The Ferret
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