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.

Jersey, the Isle of Man, the British Virgin Islands, Guernsey and Luxembourg are the places whose companies own the most Scottish property.

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.

But there are more of them in city centres than elsewhere. The postcodes with the most are in the centres of Edinburgh (EH3 9), Paisley (PA1 2), Dundee (DD1 5), Glasgow (G1 1) and Aberdeen (AB10 1).

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.

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. Ava Lee, Global Witness

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.”

Government spends just £13,000 on corporate transparency ‘crack-down’

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.”

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This story is part of our ongoing investigation into land ownership in Scotland.

The Ferret consults with our members on a regular basis about the issues that we should look into. You can get involved and help fund our next investigation by joining The Ferret.

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.

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. Jamie Livingstone, Oxfam Scotland

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.”

A Scottish Government spokesperson said: “We believe that everyone must pay their fair share of tax to fund the vital public services on which we all rely. Where we have the power to do so, we have ensured that this principle is at the heart of our tax policies.”

The spokesperson continued: “In addition, we are committed to transparency about who is making decisions about Scotland’s land. Our proposed draft regulations for a new public register of controlling interests in land owners and tenants was laid before the Scottish Parliament for the second time on 23 January 2020. The parliamentary process has been paused due to the Covid-19 emergency, but we hope to lay the regulations for a third and final time later this year.

Those who breach these new regulations can be punished by a fine of up to £5,000. Global Witness has said this is not enough to deter those seeking anonymity.

In response to these concerns, the Scottish Government spokesperson added: “We consider that a criminal penalty is a significant deterrent towards non-compliance and that the maximum value of the proposed fine is appropriate and proportionate to the offence.”

It has also said it will not bail-out companies linked to tax havens. However, they use the European Union’s list of tax havens which excludes all EU jurisdictions and the British Virgin Islands. Oxfam has described the EU’s list as a “whitewash”.

The Ferret has previously revealed that tax-haven linked firms are profiting from the NHS recruitment crisis, funding the Conservative and Liberal Democrat parties and profiting from Edinburgh’s empty sick kids hospital. The Ferret has also revealed that most of the Scottish government’s private finance deals involve companies with links to tax havens.

Should more be done to discourage companies based in tax havens from owning Scottish property?


Who owns Jura?

The data reveals that much of the island of Jura is now owned or leased to offshore companies. A 237 hectare estate is leased by a Bahamas/British Virgin Islands company called Ginge Manor.

In 2013 Green MSP Andy Wightman asked Tory Lord William Astor who owned the company. Astor said it was his children – Flora, William and James Astor. They are the half-siblings of former Prime Minister David Cameron’s wife Samantha.

According to Registers of Scotland data, Ginge Manor must pay £1 per annum in rent “if asked.”

In the south of the island, the Ardfin estate was bought for £4.9m by a Jersey-based company called Ardfin Lodge in 2010. The Ardfin estate did not reply to a request for comment.

Media reports suggest the estate’s new owner is an Australian hedge funder called Greg Coffey. After buying the property, Coffey closed the estate’s gardens to the public and plans to open a luxury golf course and hotel on the remote island. There is no suggestion that there any wrong doing is associated with the purchase.

Secret lairds

In 2016, a Perthshire castle valued at £4.6m called Tower of Lethendy was sold to a mystery buyer. It later came out through court documents that the purchaser was Boris Mints, a Russian banker on the US government’s list of businessmen close to President Vladimir Putin.

Registers of Scotland data shows that the listed owner of the Tower of Lethendy castle is a Cayman Island company called MFT Braveheart Limited.

If not for the court case, the identity of the castle’s owner would never have been revealed because of a non-disclosure agreement between seller and buyer.

Offshore offices

One of the most expensive single properties owned offshore is Standard Life House in Edinburgh, the former headquarters of one of Scotland’s biggest companies.

Records show that this property was bought for £93.75m by SLH Propco Limited, registered in Guernsey. Its owner is unknown. When asked about the property Standard Life said that following the sale of their assurance arm – which was based at the property in question – to Phoenix Group in 2018 they no longer have links with the property.

Frozen assets

A cottage in Kinross was bought in 2008 by a company registered to a PO Box in the British Virgin Islands. According to the UK government, the same PO box was used by ‘Kinloss Property Limited’, whose assets were frozen in 2011 over its links to the regime of Muammar Gadaffi, the Libyan dictator responsible for the Lockerbie bombings.

There is no suggestions of criminality or wrongdoing associated with the cases above.

This story was published in tandem with the Sunday National.

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There is only one way to battle this, and that is transparency. Make the data available in a searchable format (here or for example on archive.org) so that it will be indexed by search engines and anyone can find it when they search for names.

I think the origin of these problems is lobbying (colloquially bribery and corruption). It is too easy for money to warp democracy.

Lobbying should be made illegal.