

House of Secrets: Who Owns London's Most Expensive Mansion? - benbreen
http://www.newyorker.com/magazine/2015/06/01/house-of-secrets

======
todd8
It's not unusual for wealthy foreigners to own expensive real estate in large,
stable cities. The most expensive buildings in New York City, with beautiful
views of Central Park etc., have, surprisingly, many absent owners. Overseas
billionaires use investments in cities like New York and Sidney as places to
safely park their millions outside of their own countries. I would imagine
that London is likewise a perfect place to do this.

~~~
kvcc01
Whenever I walk in Central Park in the evening, I pay attention to how many
windows of adjoining buildings have their lights on, as a rough proxy of
current occupancy. Billionaire-class buildings like 15CPW, One57, etc. are
often 80% dark. On a holiday weekend like today (it’s considered lame to be
stuck in the city -- you need to be in the Hamptons or wherever), they can be
completely dark. I’ll go check in a while. My building on the other hand will
be lit up like a Christmas tree.

~~~
dopeboy
I wonder if there's a cool data science project here. On a repeat basis: take
a picture at night, do some basic CV on it, and output an occupancy rate.
Might be interesting for some of the luxury buildings you've noticed.

~~~
detaro
Maybe scrape public webcams for images, if there are any usable ones at nearby
landmarks etc.

------
bshimmin
Throw in a femme fatale and a couple of murders and this would make a great
film - even the name, Witanhurst, has a lovely sort of gothic noirness to it.

This was a really enjoyable read.

------
shubb
Spoiler - it's a secret because someone is evading tax, hiding mafia money, or
money they gained through corruption. It's a shame but unsurprising the
investigator is a journalist rather than the British police or revenue
service.

~~~
DyslexicAtheist
because it's registered in the name of an off-shore company? pretty much any
HNWI doesn't bank in high tax jurisdictions so yeah they're all tax evaders.
the richer you get the less tax you pay.

~~~
JimmyL
Up until last summer (when the Government won a case letting them change the
law), having your expensive house owned by an offshore corporation was the
canonical way to avoid a particular type of UK tax called Stamp Duty.

When you buy a property, you have to pay Stamp Duty [1] on the value it's sold
at. Stamp Duty uses marginal tax brackets, and the highest one (for the
portion of the transaction over £1.5M), is 12%...so it adds up if you're
buying a large house.

Given that the tax rate for buying "shares in a foreign company that has a
share register in the UK" is a flat 0.5%, the scheme was that you set up the
house as the only asset of an offshore corporation registered in the UK, and
instead of selling someone the house, you sell them the shares of the
corporation. The buyer can now inhabit the house at their leisure (since they
own the company that owns it), but the direct ownership of the house didn't
change - so no Stamp Duty was triggered.

There are likely other tax benefits to having your expensive house owned by a
numbered corporation, but Stamp Duty is/was a significant one.

[1] [https://www.gov.uk/stamp-duty-land-
tax/overview](https://www.gov.uk/stamp-duty-land-tax/overview)

~~~
charlesdm
Even with the new taxes, people were/are still purchasing through foreign
companies (that way, you avoid the 0.5% stamp duty when the shares are sold?).

They do have to pay the Annual Tax on Enveloped Dwellings (ATED) then though,
which is basically an annual tax that needs to be paid when a corporate entity
(i.e not a person or a trust) owns a property.

~~~
JimmyL
Very true, but ATED is cheap.

On a (for example) £7M house you would have paid £750K Stamp Duty, or if sold
though a corporate transfer, £35K of tax on the shares and £36K/yr ATED - so
holding it for less than twenty years would have been a deal, assuming no
other possible savings from the corporate option.

~~~
charlesdm
Probably, yeah.

Even though this law should dissuade people from buying through corporate
vehicles, all the existing housing stock (i.e. probably nearly all the
property in Kensington & Chelsea, Knightsbridge, Belgravia, etc that is from
the 1700-1900s) that is worth holding through SPVs is already held through
SPVs, and will not be captured by this change.

Developers usually split up their new buildings in separate entities before
they build anything, because I believe only stamp duty is payable on the land
then. Instead of then selling the property, they sell the shares, which is
taxed as capital gains (instead of corporate income) for them. Good times in
the luxury market, since share sales in corporate vehicles tend to be tax
free.

It's still very much a win-win situation for both seller and buyer (probably
much less for new developments after this change), so no reason not to do it.
I don't think this will raise significant amounts of tax any time soon. :)

------
justincormack
I grew up not far from there, used to look at it looking over the Heath,
falling down, like the ruins of Bishops Avenue [1], one of the most expensive
street in London.

[1] [http://www.theguardian.com/society/2014/jan/31/inside-
london...](http://www.theguardian.com/society/2014/jan/31/inside-london-
billionaires-row-derelict-mansions-hampstead)

------
m-i-l
Some points:

1\. It is not uncommon for some of the most expensive properties in London to
have "mostly absentee owners, hiding behind offshore corporations based in tax
havens". [0]

2\. Highgate does have associations with wealthy Russians, perhaps due to the
presence of the Russian Trade Delegation building, and that has sometimes led
to friction with locals. See also Terry Jones's "Trouble on the Heath". [1]

3\. The pub associated with Dick Turpin is the Spaniards Inn [2] (The Flask is
on the other side of the Heath).

[0]
[http://www.vanityfair.com/style/society/2013/04/mysterious-r...](http://www.vanityfair.com/style/society/2013/04/mysterious-
residents-one-hyde-park-london)

[1]
[https://books.google.co.uk/books/about/Trouble_on_the_Heath....](https://books.google.co.uk/books/about/Trouble_on_the_Heath.html?id=eHwqkgAACAAJ&hl=en)

[2]
[http://en.wikipedia.org/wiki/Spaniards_Inn](http://en.wikipedia.org/wiki/Spaniards_Inn)

------
jfoutz
The Queen?

