The beneficiaries behind overseas shell companies buying UK property could be named as a result of new government proposals.
A consultation, which has been launched by the Department for Business, Innovation and Skills, aims to increase transparency and reduce corruption through a public register of ownership.
The proposed register would be a global first and comes as the government aims to stamp out corporate tax avoidance, an initiative which was given further impetus at the beginning of the month with the release of the Panama Papers.
The consultation has closed and the government is reviewing options, though it would need to pass primary legislation to be delivered.
Enforcement will be complex without international co-operation, though various sanctions are being considered, including a daily fine or restrictions on buying more property.
Philip Gershuny, senior tax partner at Hogan Lovells, said: “A large number of properties are owned through British overseas territories, and although legal changes in the UK are not directly applicable to them, this makes it easier for the UK government to apply pressure.”
The list would be publicly available.
The impact on the UK
Good:
Jonathan Goldstein, chief executive, Cain Hoy Enterprises
“I don’t think anyone wants London to be a haven for money laundering by rogues and criminals. Any sensible measure that stops that from happening is to be encouraged. If buyers are kosher, they have got nothing to worry about.”
Bad:
Matthew Oakeshott, chairman, Olim Property
“The crackdown on money laundering and secret ownership will have a disproportionate effect on central London. If the market was priced for that, it would be OK, but it’s not. London offices could easily fall by a quarter.”
Negligible:
Andrew Goldstone, head of private tax, Mishcon de Reya
“Even a concerted global move towards disclosure is unlikely to have a major effect on the UK property market. Many see the privacy afforded by offshore companies as a ‘nice to have’ but not a necessity. They’ll keep buying.”
Click here for a full analysis of the regulations and their potential impact on property.
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