The Panama Papers and Cornwall


The Independent Newspaper highlights the impact of overseas buyers on house prices. Although they focus on London, house prices elsewhere are influenced by overseas buyers.

Now of course some people will still repeat the mantra ‘We must build more houses’. That is not answer but cutting demand from the wealthy is part of the solution.

UK property valued at a total of £170bn is held by overseas investors. Of course, not every purchase made by a company registered offshore is an attempt to launder dirty cash or conceal illegal activity. But buying a home through an offshore company structure is one way of escaping the taxes and costs of ownership which the rest of us all have to bear.

Now we know the scale of the influence these offshore sales are having, and it’s alarming. The Panama Papers, leaked this week, found that 2, 800 Mossack Fonseca companies are linked to the title deeds of 6, 000 properties in the UK, worth £7bn. It is estimated that 90, 000 homes in England and Wales are registered to overseas owners, the majority of which (75, 000 in total) are thought to be owned by companies registered within tax havens.

Wealthy elites, purchasing high end residential and commercial property, have pushed up the prices of housing for everyone. In the city centre, global high rollers compete aggressively for prime space, the solid investments that can weather a global financial crisis – and even a predicted future downturn. The fight pushes up the price, but when you’re finding ways to sidestep all the financial obligations that go with buying a home, perhaps that doesn’t matter quite so much. The buyers keep on coming.

For, elsewhere in the capital, the housing market is already distorted by this influx of foreign cash. While the international elite leave the apartments of central London sitting empty – a literal shell – the otherwise wealthy move towards the capital’s fringes. Even in zones three and four, the greener suburbs, even at the comparatively (though, frankly, not at all) modest level of a three bedroom family home, the housing market is now controlled by the cash buyer.

What hope for an ordinary household, requiring two incomes to repay a mortgage? Even with a major deposit of, say, 40 per cent, the buyer with the readies will always take precedence. That causes a ripple effect. According to analysts at the Centre for Economics and Business Research, house price growth in the south east of England is predicted to hit 8.3 per cent, compared with just 5.8 per cent in London. For the elite, the costs are being capped; the clampdown from Cameron and his government might be weeding out the worst influences, but the rush to buy up London has already had its effect.

http://www.independent.co.uk/voices/the-panama-papers-expose-how-the-global-elite-ruined-the-housing-market-and-stopped-you-from-buying-a6971341.html

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