Hidden Wealth Buying Up UK Properties Boosts Offshore Economy

Hidden wealth parked in offshore accounts have bolstered the prices of Miami condos and London townhouses, with Pandora Papers claiming that in the UK alone, the unnamed buyers own an estimated $5 billion of property, much of it in London, where more than 36,000 properties are owned through offshore companies.

Photo Insert: Prime London houses in an upscale neighborhood

On November 3, 2021, Margot Gibbs and Agustin Armendariz of the International Coalition of Investigative Journalists (ICIJ) reported that a recent study estimated that real estate worth between $5 trillion and $10 trillion — or about as much as the total wealth of Spain — could be owned through offshore vehicles.

“Real estate is a stable investment that often appreciates in value. By purchasing property through a shell company, buyers can secure tax breaks and shield their identities from law enforcement authorities and creditors. Secrecy also empowers criminals, including money launderers and drug cartels. Their trade in real estate through offshore companies moves millions of dollars while avoiding scrutiny. In the UK, a director of the National Crime Agency said he believed that dirty money had ‘skewed’ London’s property market,” ICIJ said.

“The combination of asset security and secrecy has also made offshore holdings a haven for money and other assets from less stable economies. A growing body of evidence suggests that offshore purchases at the high end of the real estate market have a ripple effect, pricing out people lower down the property ladder,” it concluded.

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