I can't help but think the law is silly in proscribing jail sentences to /unknown overseas people/ for being unknown. For misrepresentation sure - that is pretty much another form of fraud but otherwise a seizure by default on the grounds of no valid registered root owner makes more sense personally.
It’s about time, this has been a serious issue in the UK.
I think it was the BBC that did a program a few years ago with an undercover reporter pretending to be a corrupt Russian government official buying London real estate to launder their stolen gains.
The undercover reporter would go to see various flats with intent to purchase, and “admit” to the sales agents flat-out that he worked for a Russian health care office, processing billions of pounds worth of funding, and siphoned a little off for himself.
He’d then say he needed to know how to close on a property in such a way to hide his true identity. Without fail every single realtor gave him advice how to set up a shell company or which law firms he could contact that would do it for him by not asking all the required questions.
Even after the BBC called those estate agents and law firms to say they were duped, that the buyer was an undercover reporter, and if they had any comment, most refused to even acknowledge any wrongdoing. Despite the undercover buyer clearly indicating the funds were stolen.
It sounds like there is more to this story than just some companies (or corrupt officials behind them) buying and selling the property in London.
Could it be that US has found out many Russians seem to own property in UK but there is no way to coerce them in any other legal way?
> US has found out many Russians seem to own property in UK
Nah, it has been widespread knowledge for decades now. When Roman Abramovich bought Chelsea FC in 2003, the phenomenon was already well-known. London has been Oligarch Central pretty much since the Eltsin days.
No, the real issue is that the UK government continues to struggle under public debt. Since 2010 they've cut every expense they can cut, so now they're trying to raise taxes. One of the avenues for new revenue (eh) is to close all the well-documented tax-code loopholes; and the most classic one is where you create Company X from a tax haven, make it buy property in London, then sell the whole company, bypassing all taxes that should be triggered by property sales. That's what this new law is really supposed to fight.
It's actually not a terrible idea, and I say that as someone who actively despises the current government. Obviously it will likely end up favouring the sort of old-money connections that the Tory party naturally represents, people who cannot hide their wealth because they've literally owned most of the country for centuries; but if it brings home some much-needed cash and stems a bit the relentless flow of dirty money that keeps London fat and arrogant, so be it.
I wonder if you could combine that approach (having property owned by a company in a tax haven) with Prop-13 (in which property taxes grow very slowly if the property is not sold), and if anyone has ever done an assessment of how much property in California is owned by such entities.
FinCEN is doing that in the larger metropolitan areas but they aren't publishing the data. They've been looking into real estate money laundering in the US on a larger scale for the past couple of years.
There's an exemption from reassessment if the California property is held in a real estate trust established by a financial institution, and the shares are sold. My understanding is that it's common for large commerical properties to be held in this fashion, such that they can be sold without triggering a reassessment. No tax haven required.
London doesn’t have the annual property taxes on held real estate that exist in the USA.
There is a one-off stamp duty at purchase time. But if you buy a property, you can hold it without further taxes.
*there is something called council tax, but it’s usually minimal, eg £2k max in many outer London boroughs, and in he case of rentals paid directly by renters.
yes, that’s why a CA law was recently passed that when ownership of the real estate owning company changes hands, that is a) a change in ownership of the property and b) such changes must be reported to CA.
unenforceable, eg there’s no way for CA to find out when foreign (non-CA owned) companies change hands, but at least the law is on the books.
And, of course the trivial work around that is to have the ownership of the real-estate owning entity be yet another offshore series of organizations. That way the principal owners of the entity which has title property never change, but the beneficial shareholders of those entities can be transferred. Etc, etc...
I.E. For a property on 4th avenue, the entity which owns it is Starfish Inc. The shareholders of Starfish Inc, are Corp1, Corp2, and Corp3.
The property on 4th avenue is never sold, it is always owned by one owner - Starfish Inc.
Likewise, Starfish Inc is never sold, it is always owned by Corp1, Corp2, and Corp3.
Add as many levels of indirection and obfuscation in as many tax-free havens as it's worth to avoid having to pay additional property taxes.
Only the shares in Corp1, Corp2, and Corp3 are transferred/sold to new parties.
> the BBC that did a program a few years ago with an undercover reporter pretending to be a corrupt Russian government official buying London real estate
Key quote about the motive for estate agents turning a blind eye to the clear admission of fraud :
“Behind the deals, claims the documentary, lie easy profits for estate agents. If “Boris” had gone ahead with the purchases they stood to earn between £65,000 to £315,000 in commissions.”
Not to nitpick, but if I remember correctly at least one of the realtors did become uncomfortable and shut down the whole thing. He was the exception, though.
So let's say the buyer didn't go running his mouth about stealing the money, and didn't lie about who the beneficial owner was, how exactly is having his name as the beneficial owner of a property going to stop money laundering?
> "A ban on a foreign entity selling or leasing a property without declaring its beneficial owner, with jail of up to five years and an unlimited fine for those failing to comply"
Is there going to be a mechanism to prevent straw man beneficiaries?
I think your argument is orthogonal to this issue and therefore moot. If you can explain why that is not the case, please do so, I would like to understand it.
What, maybe a million or two for the cost of not being able to live inside the social circle where you've always existed? You're basically on the run for the rest of your life and have to practice the strictest security online for fear of being found by accident by someone who might want to kill you.
Held against the risks and potential future you might gain in the best case, I think you can say the payoff is tiny.
I am sure that is impossible short of making all property owners sign some sort of legal declaration that they are the real owner and the property is not encumbered in any way. But given how many middle men and woman these people are already willing to pay to hide their identity, I am sure they would find all sorts of ways around that.
This feels like a Brexit dividend - no seriously hear me out - the normal conduct of government business is so snarled up with Brexit that almost nothing can get through - so despite lobbyists, it seems good ideas with clear benefits get through simply because government has to do something - and the simplest clearest actually obvious ideas are the only ones everyone can understand in the time acaikable
Americans commonly use the phrase "the government" to refer to any or all of the branches of government, not just the executive branch. Guessing the comment you're replying to was written by an American.
Americans also use "legislature" to refer specifically to the legislative branch of our and other governments responsible for drafting legislation, which certainly does not draft nor pass itself into law.
The legislation is proposed by the government, as they have a majority is is usually expected that it will pass due to their majority but it is not guaranteed, depending on how controversial it is and how much of a majority they have. legislation can also be proposed by individual MPs.
In this situation this new legislation was introduced by the government.
Anyone think it is reasonable to predict plummeting high end real estate prices and a further pummelled pound as demand dries up and motivated sellers dump properties and sell pounds here?
I just wonder what is the bigger story behind this anyway? I have come across this study that claims that UK has the largest net debt to other EU countries. [1] There is significant amount of debt that is "mutual" within the EU in that it could be "canceled out" (I.e. UK owes Germany, Germany owes Italy, Italy owes UK) So here is the result: http://econ.anthonyjevans.com/2012/08/eu-debt-write-off/writ...
UK €460Bln, Italy €204Bln ... Germany €108Bln, France just €1Bln.
So this clearly shows that UK might indeed profit from the devaluation of pound. Is UK so far on the debt spiral that has to do it? Thus Brexit?
Some of them are just buying a home, I was caught in this when I bought my first flat, prices fell by 25% and I found it very difficult to move when my job moved.
That’s risk vs reward though. You take the risk that prices will drop (and that you will have less flexibility to move) in exchange for the reward that prices will rise (and for a slightly more stable cost than renting, sometimes). You can’t have it both ways.
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[ 329 ms ] story [ 202 ms ] threadI think it was the BBC that did a program a few years ago with an undercover reporter pretending to be a corrupt Russian government official buying London real estate to launder their stolen gains.
The undercover reporter would go to see various flats with intent to purchase, and “admit” to the sales agents flat-out that he worked for a Russian health care office, processing billions of pounds worth of funding, and siphoned a little off for himself.
He’d then say he needed to know how to close on a property in such a way to hide his true identity. Without fail every single realtor gave him advice how to set up a shell company or which law firms he could contact that would do it for him by not asking all the required questions.
Even after the BBC called those estate agents and law firms to say they were duped, that the buyer was an undercover reporter, and if they had any comment, most refused to even acknowledge any wrongdoing. Despite the undercover buyer clearly indicating the funds were stolen.
Nah, it has been widespread knowledge for decades now. When Roman Abramovich bought Chelsea FC in 2003, the phenomenon was already well-known. London has been Oligarch Central pretty much since the Eltsin days.
No, the real issue is that the UK government continues to struggle under public debt. Since 2010 they've cut every expense they can cut, so now they're trying to raise taxes. One of the avenues for new revenue (eh) is to close all the well-documented tax-code loopholes; and the most classic one is where you create Company X from a tax haven, make it buy property in London, then sell the whole company, bypassing all taxes that should be triggered by property sales. That's what this new law is really supposed to fight.
It's actually not a terrible idea, and I say that as someone who actively despises the current government. Obviously it will likely end up favouring the sort of old-money connections that the Tory party naturally represents, people who cannot hide their wealth because they've literally owned most of the country for centuries; but if it brings home some much-needed cash and stems a bit the relentless flow of dirty money that keeps London fat and arrogant, so be it.
There is a one-off stamp duty at purchase time. But if you buy a property, you can hold it without further taxes.
*there is something called council tax, but it’s usually minimal, eg £2k max in many outer London boroughs, and in he case of rentals paid directly by renters.
unenforceable, eg there’s no way for CA to find out when foreign (non-CA owned) companies change hands, but at least the law is on the books.
I.E. For a property on 4th avenue, the entity which owns it is Starfish Inc. The shareholders of Starfish Inc, are Corp1, Corp2, and Corp3.
The property on 4th avenue is never sold, it is always owned by one owner - Starfish Inc.
Likewise, Starfish Inc is never sold, it is always owned by Corp1, Corp2, and Corp3.
Add as many levels of indirection and obfuscation in as many tax-free havens as it's worth to avoid having to pay additional property taxes.
Only the shares in Corp1, Corp2, and Corp3 are transferred/sold to new parties.
Would you happen to have a link?
https://www.theguardian.com/uk-news/2015/jul/07/london-estat...
Key quote about the motive for estate agents turning a blind eye to the clear admission of fraud :
“Behind the deals, claims the documentary, lie easy profits for estate agents. If “Boris” had gone ahead with the purchases they stood to earn between £65,000 to £315,000 in commissions.”
So, if a former Russian public official is revealed to be the owner of a £10m property in London, he is at risk of having it confiscated.
Is there going to be a mechanism to prevent straw man beneficiaries?
Held against the risks and potential future you might gain in the best case, I think you can say the payoff is tiny.
In this situation this new legislation was introduced by the government.
UK €460Bln, Italy €204Bln ... Germany €108Bln, France just €1Bln.
So this clearly shows that UK might indeed profit from the devaluation of pound. Is UK so far on the debt spiral that has to do it? Thus Brexit?
[1] https://www.cobdencentre.org/2011/05/how-much-eu-debt-can-be...
Maybe if they did something to actually prevent such investment.
https://www.theguardian.com/world/2015/jun/18/uk-reject-eu-p...
https://www.theguardian.com/business/2017/nov/26/british-gov...
https://www.independent.co.uk/news/uk/politics/paradise-pape...
https://medium.com/the-jist/uk-vs-eu-tax-evasion-investigati...
Whatever the UK does to look like it is addressing the issue of tax avoidance, it's exactly that; pure theatrics.
The UK, my own country (or at least its wealthiest citizens) is a huge beneficiary of offshore schemes and complication tax arrangements.