Selling England by the offshore pound | Hacker News Reader

Selling England by the offshore pound

private-eye.co.uk

81 pointsrobin_reala72 comments

First for any non-UK'ers who happen to be having trouble with the terminology used:

If you own the "freehold" on a property it means you own the building and the land

If you own "leasehold" you have a sort of long-term lease on the property for a fixed and agreed upon length of time (could be 50 years, could be 100 years).

On a slightly different but related note (i.e not necessarily foreign owned properties) the Private Eye article only shows the data for England, its actually a good deal worse in Scotland where huge chunks of the country are owned privately and indeed sometimes the owners are not even known. Take a look at the map in the link below for a bleak picture http://www.theguardian.com/uk-news/2013/aug/10/scotland-land...

As someone who bought a city property last year the Scottish system is lightyears ahead of England. I don't have to worry about leasehold, freehold etc - I bought my flat, it is mine. Buying through solicitors and the associated regulation produces a much more civilised system without gazumping (or at least much less of it).

If you've ever spent much time in the Highlands you'll realise how remote and limited it actually is. You're realistically always going to have very large tracts of land owned by individuals or groups because it requires economies of scale to run. Short of making almost all of it national parks I'm not convinced the current state of play is that bad. Plus there is the right to roam legislation enabling people to actually use the land, it isn't like you're not allowed to walk on it.

Political sorts in Scotland like to produce statistics like "70% of the land area of Scotland is owned by 500 people!" in order to shock people into supporting their generally redistributive political views - it is endlessly brought up.

But when you factor in land area value - if you could distort the area of Scotland such that the land value and the area were 1:1 - then suddenly it doesn't look anything like as bad. As the market says that owning a 4 bedroom flat in the west end of Glasgow in fact is worth more then 10,000 acres of land in the highlands.

Given as well that Scotland has very robust "right to roam" - people can walk on privately owned land as long as it isn't your back garden - and also laws to allow "wild camping" and so on, it just doesn't seem like that big of an issue to me either.

But nationalists in every country become obsessed with who owns the country, especially if it is people outwith the country, people against their cause etc - the SNP are no different.

I'm not Scottish but I live in the Highlands. I think it's less to do with nationalism and more to do with to do with security of tenure. A lot of rural housing and farmland is owned by these large estates. The houses that have not been converted to holiday lets are often badly maintained and leased on very short term tenancies by absentee landlords. Tenant farmers on these estates have the additional problem that they can be also be evicted from the farmland.

As someone who's considering buying in Scotland in the not vastly distant future, this. It's a question of what the land is used for and the scale of it.

Yeah good point, Scotland hasn't got the lease\freehold distinction.

Converting large chunks of the Highlands into national parks would be a great idea IMO.

A large chunk of the Highlands is already a National Park:

http://cairngorms.co.uk/

Arguably a large part of the Cairngorms national park is not in the Highlands, but you're right. An additional nice thing is that the Cairngorms National Park is rare in the UK in that it is actually something resembling a proper national park.

What part of the national park would you say isn't in the Highlands? It's not all in the Highland Council area but that's not all of the Highlands:

https://en.wikipedia.org/wiki/Scottish_Highlands

Maybe Ballater - I wouldn't put that in the Highlands although Braemar clearly is!

Apart from along the Highland Boundary Fault I think the actual boundary of the Highlands is fairly fuzzy anyway :-)

Maybe my mental image of what is/isn't the highlands is pretty far off the norm :) In my head it's whatever is north\west of the invisible line between Inverness and Fort William (like that upper bar of the old BBC Scotland logo).

Isn't that the Western Highlands - i.e. the bit beyond the Great Glen?

Unfortunately parts are being developed on

http://www.bbc.co.uk/news/uk-scotland-highlands-islands-3380...

National Parks can still get developed on, they aren't kept in aspic. UK National Parks are fairly unique in that they often contain substantial settlements, and as such need to change over time. Covering them completely in concrete is obviously a bad thing but providing the ability for local people to still live there (as any population is liable to grow), offer more facilities for people to enjoy the park etc is surely a good thing.

There are benefit to the British system too. The real problem is common with both systems: bubble seller market like in London, and month long administrative procedures for what should be trivial matters in 2015.

With the British system (in short, non-legally binding offer, deposit 5 days before getting the keys), you have plenty of time to do survey and make sure everything is correct without risking your deposit. For better (buyer market) or worse (seller market) negotiation is open till the very end when both parties have maximum information.

I have seen friends struggling in similar seller market in more "civilised" countries. They had less risk of gazumping, but the risk of betting blind is very real.

As for the lease holding, there is no simple "flat ownership" as it is part of a building and that means shared responsibilities on the common and weirdo syndic / condominium / association of owners. I don't mind the British way, but I suspect that is mostly because I have a good landlord but had a flat in a shitty community in Spain.

> flat in a shitty community in Spain.

What happened? I had an apartment abroad for about a decade, paid annually for security for the building and underground garage (this is Africa btw), cleaning and concierge and it was great. I always wondered what'd happen if things went sour in the association of homeowners but at the same time I could hardly conceive issues and never heard of problems from friends, either. A lot of issues of the commons never seemed to pop-up.

Plenty of annoyances - landlord teaming up together, article of associations written by a company that we learned later one of the landlord is director of, ...

One instance in particular - we don't have a parking space but we have a cellar at the same level than 1 of the parking floor. Because there is no lock on the door that leads to the parking, the landlords with parking decided that it means we need to pay the charges for the parking and parking elevator (for which we don't have the keys). Obviously they declined the request to put a lock on the door. They can do it because they are the majority and the way the article of association were written. We could contest legally of course, or team up with other landlord to build a majority that would lead to the charges being split between all landlord regardless if they have a parking or not.

We are talking about 20 flats here, and frankly we would like to avoid the political drama.

Edit: Some info about the UK process. Here after we made the offer (not legally binding in the UK), we had the solicitor review the leasehold contract for such problems. There is always a freeholder that is responsible for crafting the leasehold unlike in Spain when the association of landlord is formed after ( for new build anyway ) and anyway, a side effect of the legally binding offer is that you are psychologically driven to minimise the impact of a solicitor report ( btw, the notary in Spain that deal with property purchase is there a lot more to validate the transaction rather than defending your interests, so they don't really highlight those kind of things as clearly as UK solicitor - of course there are good ones and bad ones YMMV)

> I bought my flat, it is mine.

Is that so? Wow. In other countries you deal with a home-owners association and you get a right-to-occupy that particular space and 1/nth of every brick the building is made out of.

Well there is a lot of old Scots law words in the legal document about how tenements work, but essentially it is mine. There is a "stair committee" which handles things like common repairs to the roof, stair, garden etc but it is all very consensual and decent.

The system isn't perfect. For properties that had no common committee there used to be the Statutory Notice system run by the council but that got abolished after a massive corruption scandal!

> Well there is a lot of old Scots law words in the legal document about how tenements work, but essentially it is mine. There is a "stair committee" which handles things like common repairs to the roof, stair, garden etc but it is all very consensual and decent.

So in practice is there any difference from the leasehold system that I have here in England?

Forgive me ... I'm afraid you're going to have to define "gazumping" ...

First paragraph of wiki has a good definition - "Gazumping occurs when a seller (especially of property) accepts an oral offer (a promise to purchase) on the property from one potential buyer, but then accepts a higher offer from someone else. It can also refer to the seller raising the asking price or asking for more money at the last minute, after previously orally agreeing to a lower one. In either case, the original buyer is left in a bad situation, and either has to offer a higher price or lose the purchase"

https://en.wikipedia.org/wiki/Gazumping

Scotland only got rid of the last vestige of feudalism in 2000:

https://en.wikipedia.org/wiki/Abolition_of_Feudal_Tenure_etc...

There are reforms to this whole area in the works though:

http://www.bbc.co.uk/news/uk-scotland-scotland-politics-3322...

NB The whole issue of land ownership is rather contentious for historical reasons....

> the Private Eye article only shows the data for England

The data also includes Wales.

For those looking to research this further, there was also an excellent piece on the Private Eye podcast which explores this in more detail:

https://soundcloud.com/privateeyenews/page-94-episode-8

Private Eye is doing the work our press should be doing. They are a true bastion of freedom shining a light into the dark cesspool of the UK establishment.

Subscribe to support them!

Incidentally, if we are going to have global trade deals like TTIP and TPP, which roll in all sorts of domestic regulations in the name of a level playing field for global trade, I'd also like to see rules included which level the playing field for democratic governments, campaigners and ordinary citizens. For instance land ownership comes with liabilities, I can't see how it is possible for that to be enforceable if the land can be owned by a brass plate in the Cayman Islands. What reason is there, other than vested interests, not to include some sort of transparent ownership of property and assets in these international deals?

It's almost as people are buying property in Britain as if it's some kind of international ponzi scheme for the ultra rich...

It's like the UK is winning the competitions for "the easiest place to launder money" and "place with most regressive land rights"

Britain is hardly alone in this. Prices in Vancouver and Toronto are absolutely insane when one considers incomes in the region. Sensible minds have been claiming a crash for years but property prices continue to go up. Funny thing is that the crazy housing in Britain/Canada make Bay area housing appear like a good deal :-p

If anyone has a book/documentary suggestion on understanding what is going on, would appreciate it.

I'm glad you asked:

http://www.amazon.com/Progress-Poverty-Industrial-Depression...

Progress and Poverty, by Henry George

> This classic work is an enquiry into the cause of industrial depressions and the persistence of poverty amid advancing wealth. Published in 1879, it was admired and advocated by great minds such as Albert Einstein, Winston Churchill, Leo Tolstoy and Sun Yat-sen in China. Henry George lived through a period of American history which witnessed the closing of the frontier, and he noticed the dramatic deterioration in the condition of labour once that happened.

Read it, it's great.

Central London is really the only place in Britain that makes the Bay area look OK in comparison.

According to Numbeo.com's cost of living comparisons, SF is a bit more expensive to rent in than London, and a bit cheaper to buy in. But of course, these are very generalised/averaged numbers, not looking at anything as specific as "the bay area".

  SF
  Apartment (1 bedroom) in City Centre 			3,321.03 $ 	
  Apartment (1 bedroom) Outside of Centre 		2,580.00 $ 	
  Apartment (3 bedrooms) in City Centre 		6,393.33 $ 	
  Apartment (3 bedrooms) Outside of Centre 		4,928.57 $ 	
  Price per SQM to Buy Apartment in City Centre 	14,819.28 $ 	
  Price per SQM to Buy Apartment Outside of Centre 	9,543.88 $ 
  
  London
  Apartment (1 bedroom) in City Centre 			2,510.87 $
  Apartment (1 bedroom) Outside of Centre 		1,700.43 $
  Apartment (3 bedrooms) in City Centre 		5,099.81 $
  Apartment (3 bedrooms) Outside of Centre 		2,985.64 $
  Price per SQM to Buy Apartment in City Centre 	23,868.09 $
  Price per SQM to Buy Apartment Outside of Centre 	12,413.72 $

Obviously there are specific stupidly-expensive areas in London, and indeed outside London in the UK.

Either I have a very different idea of what London's "City Centre" is, or the numbers above for London look quite low. That said, for some people, Zone 4 is "central" and for others only Zone 1 is. Curious how the SF numbers compare in this regard.

Traditionally Zone 1-2 is central.

Anyone who calls Zone 4 central is deluded.

Keep in mind that the same job often pays considerably less in London than it does in San Francisco. And I'm not referring to taxes but actual salaries. I've known quite a few folks who have taken pay cuts when moving to London and folks who have received considerable pay increases moving to a major city like San Francisco or NYC from London.

Partly that's due to competition for the small pool in SF being larger. There's a lot of people looking for fewer jobs in London (tech especially). In SF - reverse.

I think it goes for other industries too. My wife who works in finance and accounting makes quite a bit more in NYC than she did in London, even for similar roles in similar industries.

But you may have a point in that London being the only game in town has a lot of competition among the workforce. Also, I believe it costs much more to employ someone there and there are many more protection for employees. For instance, it is very difficult to fire someone in the UK and it is not that way in the USA.

That's also true, though I doubt it makes that much of a difference to salaries.

Simply put: I could quit my job today and have a month of interviews lined up in a few days in SF. In London? Not enough companies to sustain that.

That leads to companies competing for talent on wages.

London is great but it never really got a tech boom like SF did.

this was recommended to me: All that is Solid by Danny Dorling http://www.dannydorling.org/books/allthatissolid/

Prices in Vancouver and Toronto are absolutely insane when one considers incomes in the region.

Vancouver has hints of insanity, but Toronto's pricing is entirely rational for the current financial reality -- more and more people, and more and more money, bidding up a fixed amount of housing. It has significant ongoing migration from around the world, so if you're a new grad who wants to live downtown, well your dollars are competing with dollars from around the globe. That's how those things are supposed to go.

The fly in the ointment is, of course, low interest rates, and minor movements would be catastrophic. Which is exactly why I think low interest rates are essentially the fundamental reality in the US and Canada -- they have been structurally stratified, and any increase would cause economic devastation that would cause the rates to drop again.

I believe that raising interest rates would cause a pretty large fall in housing prices in cities that have large foreign ownership.

With interest rates rising, the bid for housing will drop accordingly and many of these investment properties would immediately be put on the market to extract full value from them which would cause a glut of supply. This would further cause prices to fall.

This would be a good time for someone with a huge cash downpayment (or cash outright) and the prospect of actually living in the place full time to purchase a property in these areas.

Honestly, until then it makes more sense to rent if you can't afford to pay cash outright due to maintenance fees, property taxes and so on. In NYC buying a condo with 20% down is foolish right now, for instance. Especially if interest rates do indeed begin to rise. Better off saving as much cash as possible and waiting for rates to rise which should cause plenty of investment properties that are rarely lived in to go on the market to quickly harvest the proceeds.

Toronto != Downtown Toronto. Part of the reason everyone wants to live in the core is the horrible public transit system. I used to live uptown but near the TTC - almost every weekend in the summer, we had to use shuttle buses because of track maintenance.

When I look at the GTA, prices make no sense to me. Million dollar homes in Markham, 600K townhomes in Mississauga? What incomes justify this?

I do agree with you on the "low interest rates or else" theory. Even a few points increase will cause people at the fringes to exit the market. And that has potential to topple everything over.

Many once "low paid" positions now pay reasonable well in the area -- police officers, for instance, can easily make over $100K per year. Have both adults in the house working at those sorts of income levels, and a 600K house is entirely reasonable. Add the green belt encircling the city (the normal release valve of bidding up) and prices rise.

Housing is an interesting economic phenomena because people are often willing to pay whatever is possible to pay, so if you have 100 houses in an area and a single working adult in 100 households, prices will fit the ability of a single working adult. Now get rid of inequality and have the second adult working, and prices simply explode to fill the ability to pay of both adults. And so on. It's how we run to stand still.

Why does this matter? Somebody's going to own the land. If English people don't want foreign companies owning it, then they should make that illegal. If they don't have a stranglehold on who must pay tax to the UK government then they should tax something else they they do have control over instead. If these things have side effects that are even worse then welcome to the free market - you have to make yourself attractive to taxpayers if you want them to come and pay tax.

Australian have similar concerns. They don't like rich foreigners buying their property. Yet somehow they still allow it.

> Why does this matter? Somebody's going to own the land.

If the demand is coming from a rich external country, it can create a situation where citizens can't afford property. For your others points, if the skin color of external people isn't white, creating any new common sense legislation to protect the interests of citizens can be difficult due to immediate cries of racism (which it isn't of course as it would apply to all non-citizens equally, but lets not let facts get in the way).

I don't think the concern is about foreign ownership per se, but rather the lack of transparency associated with the offshore companies, particularly in relation to potential tax (Stamp Duty) avoidance and money laundering[0].

[0] http://www.theguardian.com/uk-news/2015/jul/25/london-housin...

agreed, I looked around the area I live in Kent and it looks like people buying a house "tax efficiently" ahem, via companies in the Channel islands, rather than oligarchs buying up swathes of the town.

It matters because when a country (i)is busy trying to balance its budget in a time of relatively little economic growth and (ii)has experienced a sustained and relatively rapid growth in land values over a long period of time, taxing some of that property price appreciation is sensible economic policy, and often-opaque[1] tax-evading shell companies are a natural target for slapping with a property tax if they want to continue holding onto all that prime real estate.

[1]probably a sizeable portion of these apparently foreign entities are actually holding companies for Britons and UK registered companies.

Because people end up having to spend all their labour derived income on economic rent extraction by a financial elite.

This explains why (my) rent is so high - and why the first time buyer is a thing of the past in London.

Most of the "foreigners" seem to Jersey, British Virgin Isles, Guernsey, Gibraltar, Isle of Man. Are they just tax dodges from UK citizens?

Many of them will be British. But regardless of nationality, there's a logic in domiciling your holding company for British assets in a tax haven familiar with the intricacies of British property law. And Crown Dependencies make up a surprisingly large percentage of reliable tax havens...

It's not all bad. For example I found Giorgio Armani to hold a 4 million pound property, based in Italy, the italian high-fashion company of course. The map isn't a list of only tax-avoiding cayman-island listed oil doller financed foreign ownership that you could criticise.

Another fun one is the new American embassy, 64 million pounds. Proprietor listed as 'United states of america', country listed as 'unable to confirm', haha. One of the few freeholds on the map by the way and one of the biggest, too. Not finished if anyone's wondering.

Other than that, the majority of the map is pretty insane. Isle of man, panama, cayman, jersey, it just keeps on going.

Anna Powell-Smith... I thought I recognised that name. She's done quite a few of these interesting visualisations. Her website is http://anna.ps/

A lot of the properties in my area are addressed as "Airspace above ...". Any idea what this is about?

At a guess - flats / apartments located above an area of land.

Sadly not a new concept. The UK has been on the slide for a hell of a while.

Genesis from 1973: Selling England by the Pound

https://www.youtube.com/watch?v=7Rn9tzirks4

Is this a case of wealth UK residents fleeing to less tax-greedy locales and leaving the land for whomever is willing to deal with inland revenue?

Like Phil Collins of the band that made "Selling England by the Pound".

Edit: What's with the thing where I get downvoted and my comment shows as downvoted for other people (or at least for me when I'm not logged in), but not for me? It's like a kind of half-arsed shadowban or something. Bug?

I wish someone would have answered my question.

I did like learning the music trivia, though. I like them.

Peter Gabriel was the lead singer at the time that album was made. Phil didn't join until much later.

Phil joined Genesis as the drummer in 1971 at the same time as guitarist Steve Hackett, and both play on the band's third album, "Nursery Cryme". Phil even sings a song on that album, "For Absent Friends" [1]. The band records "Foxtrot" which includes the epic 23-minute long "Supper's Ready" [2] and then the album "Selling England by The Pound", which contains two of early Genesis's best songs "The Cinema Show" [3], which has an extended keyboard solo, and "Firth of Fifth" [4], which has the Hackett's most famous guitar solo. After the next album, a double concept called "The Lamb Lies down on Broadway" (consistently rated as one of the best prog rock albums) Peter Gabriel leaves and has a successful solo career. The band continues with Phil as the singer and, after Hackett leaves a few years later, they become more pop focussed, and have a load of hit singles in the 80s and 90s.

[1] https://www.youtube.com/watch?v=cHWJ-7BUCNg [2] https://www.youtube.com/watch?v=M58wE8GTGp4 [3] https://www.youtube.com/watch?v=G501Ii0X0NE [4] https://www.youtube.com/watch?v=SD5engyVXe0

Collins was already in the band (IIRC he may even have been a founding member). The difference is he wasn't yet the frontman – he was the drummer. Pre-Collins-fronted Genesis is way better though, IMO (I do like me some progressive rock, though).

The things I learn visiting here amaze me. I liked their music but never placed a group/faces to songs I saw one on MTV with PC as lead. I thought they formed the group with that format.

Phil was the drummer on that album

Though he did sing the lead vocal on "More Fool Me", on that album.

Not "leaving the land"....then buying the land with their offshore dollars

Crocodile tears are being shed.

Britain has been enriching itself using outright aggression prior to WW2, and since then using its influence in the global monetary system.

Mexico, Bangladesh and india has been for years trying to pursuade the british govt to help them get all the black money locked up in the UK back to them. And I am not sure what is going on with all the Russian black money. The Saudis too use London to hide their petroldollars and so do countless african dictators and terrorist organiznations.

It will be sweet to watch when the chickens come home to roost.

Empire is of no relevance to British citizens today, or for a long time, whereas this is.

Also, I've never read anything about this mexican/bangladeshi/indian/russian/saudi black money that you're talking about—link?

The downvotes for the original poster in this thread are probably due to the rather vitriolic sounding language used.

But, setting that aside and responding to your question :

It's ironic that if you had ever followed Private Eye, you would have read all the details of money laundering through London; the original article is really about exactly that and how people can use anonymous companies (often in Nevis) to launder huge sums through London property and the lack of action by UK authorities even when egregious abuses take place.

So, a starting link is http://www.private-eye.co.uk/registry - EXACTLY the one that this discussion is about.

Exactly - the UK is the home of financial fraud. Many of the problems of tax evasion stem from their tax havens set up around the world.

The City is a cancer that is feeding on the entire world. The City needs exorcising from the UK. And like all parasites it would not survive without protection for long.

Ah, I completely misunderstood the original commenter and in my mind conflated "outright aggression since prior to WW2" stuff with the black money, I was probably confused because the money laundering is kinda what the graphic alludes to.

Maybe this: http://www.theguardian.com/uk-news/2015/jan/25/its-like-a-gh... ?

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