New research has found that there are thousands more offshore tax haven homes – worth billions of pounds – in South London than initially thought, which create serious “social harms” for local people.
A new report by Kingston University Wealth Chain Project, funded by Trust for London, shows that about 5,500 homes in three South London boroughs are owned by property holdings firms, established in tax havens such as the British Virgin Islands and Guernsey.
A key motivation for these offshore firms to buy London real estate is its use as a “pure investment”.
The report said London’s homes were a store of value in the same way as safety deposit boxes were used to store valuables.
The key areas in South London identified in the report are Wandsworth, Lambeth and Southwark, where a further 2,300 more offshore tax haven homes have been discovered.
The total number of these homes are estimated to be valued in the billions of pounds, although exact figures will be produced in a new report soon.
In Lambeth and Wandsworth, the new Nine Elms development in Battersea has seen a significant amount of investors from overseas, while the Elephant and Castle regeneration has drawn in buyers to Southwark.
The report lays bare the effects this has on the surrounding areas, as locals identified as “hard pressed” are pushed to boundaries of that area while the new properties accrue value.
This has a domino effect on local people and representatives of affected areas that tend to show a “pervasive mistrust of the local councillors” who were responsible for key housing and planning decisions that have investment capital in their areas.
The report’s authors suggest the need for a progressive tax on offshore investment that could be used to offset the social costs induced by it in London and the UK more generally.
Diane Skidmore, 72, a housing activist who has lived in Tulse Hill for more than 30 years, said the offshore property developments in Lambeth had pushed local people out and created poverty, despite there being hundreds of empty homes.
“If you look at the new flashy buildings in Elephant and Castle at night, they’re all empty. The poverty on the streets there is outrageous.
“Empty houses and homeless people go together. The ordinary people that used to live here are gone and the ones that are left are in debt because they can’t afford the costs.”
Dr Rex McKenzie, author of the report, said: “In order to address the social harms associated with tax haven inflows into London’s property market, an annual progressive tax levied on offshore owners is needed.
“The proceeds should be directed at supporting both housing and social and economic services. Until quite recently this would have been impossible because we simply would not know who to tax.”
Pictured top: An aeriel view of the Nine Elms development, where offshore firms have bought homes (Picture: PA)