Earlier this week the Panama Papers, the largest leak in journalistic history, revealed the extent to wealthy individuals use offshore accounts in tax havens to avoid paying as much as, ya know, us mere peasants. The nature of the documents is as shocking as it is unsurprising.
As more details emerge, there is little doubt the political elite asking us to bear the cost of recession will be further exposed for their hypocrisy. Needless to say Putin has already been named (obvs), along with Iceland’s PM. In the meantime David Cameron, whose father ran offshore fund firm Blairmore Holdings in the Bahamas, has taken a head start and already come out to deny any personal or family involvement.
75,000 UK Properties
His statement was so embarrassingly rehearsed and tactfully worded, one may have been less suspicious had he pleaded full-on guilty. In fact, he’s already gone back on his word before I even had time to wrap up this blog post. Smooth Dave, you nearly made me sound outdated!
More importantly, the Mossack Fonseca files show how billions of pounds of offshore cash flooded the British property market. Politicians, businessmen and celebs are among those whose secret ownership of London property has been exposed.
Estimates by the Guardian suggest more than 90,000 properties in England and Wales are listed in the Land Registry to overseas owners, at least 75,000 of which are owned by companies or individuals registered in tax havens. People now known to have built offshore property empires in the capital include:
- The president of the United Arab Emirates
- The prime minister of Pakistan
- Iraq’s former interim prime minister
- The president of the Nigerian senate
Complicit & Beneficiaries
Not many people in need on the list so far. Not gonna lie, given the current state of the UK housing market, that hurts a little bit. Now, it would be ludicrous to suggest the housing crisis is caused by this phenomenon alone. But since so many are taking a mono-causal approach to this debate (largely pointing the finger at immigration, surprise surprise), it might be worth mentioning some of the other factors which contribute to the chaos the UK property market has become.
This is one of them and it should be easy to tackle, were the people in charge not complicit, if not direct beneficiaries. One might cry at oversimplification here, or perhaps point to the fact these practices are perfectly legal, as if synonymous for morally right. Yep it is entirely legal, and that’s precisely the problem. This is not a simple case of corruption, it’s more serious and complex than that. It’s the system which is flawed.
We live in a country where most young people cannot afford to buy a home, and barely to rent. As I reluctantly reach what I now have to call my mid-twenties, I’m still surrounded by friends my age who go home to their parents like schoolkids because they can’t afford otherwise. They may never experience the pride which I can only imagine comes with owning your own home. We may actually become generation ‘soz, you’ll have to wait for your parents to die’.
This is the context in which these thousands of properties are bought through tax haven-based companies, by people who are already wealthy enough to restructure their finances to take advantage of tax havens, driving up house prices, and pushing out owner-occupiers. It matters. And it puts to bed the silly dogmatic myth that a capitalism with no boundaries creates concentrated wealth which trickles down and is beneficial for the many.
These people buy property not to start a life, not for personal fulfillment. They do it because they are bankable assets, and because unlike most of us, they have immediate resources to. They do it, ‘cos they can. We can’t let this carry on.