Link Holdings (Gibraltar) Ltd

Regular readers of Private Eye – and perhaps those who abjure Lord Gnome’s organ – will know there is now a database available that tries to list all property in Wales and England owned by overseas registered companies. You can browse it here.

Naturally, my interest was in Wales, and so I extracted the Welsh properties from the database and these can be viewed here, grouped by local authority, and then, within each LA area, ownership is shown alphabetically.

It soon becomes clear that different companies can be found operating in different areas, some in more than one area; but one particular company stood out for the sheer number of properties it owns.

I’m referring of course to the company of the title, Link Holdings (Gibraltar) Ltd. Here’s a list of Link’s properties, again, grouped by local authority, and in date order with the most recent purchases at the top. Though you’ll see that Link also owns a few houses (and a garage!) in Colchester, Essex, which seem to be the only properties the company owns outside of Wales. I’d love to know the explanation for the Essex outlier.

Perhaps the most striking thing about the Link properties is that a great majority of the title documents, almost all, in fact, bear the same date, July 24, 2006. There are so many titles bearing this date that I think it must signify the transfer of a large property portfolio to Link Holdings (Gibraltar) Ltd on that date. Which raises the question, whose portfolio was it before Link bought it? Alternatively, it could just be a change of name. In which case, what was the previous name of Link?

Although my interest was aroused by reading the articles in Private Eye and checking out the map, what really kick-started this investigation was someone in Swansea contacting me through Facebook to say that a number of the properties listed for Link in fact belonged to a housing association, which I thought was odd.

The properties my source was referring to are in Penmaen Terrace in Mount Pleasant, three- or four-storey houses, once homes to the local bourgeoisie now broken up into self-contained flats of the kind popular with students. (The picture below shows the kind of properties I’m talking about, though not necessarily the one I shall now focus on.)

penmaen-terrace

My informant referred me to No 5, which she assured me was rented out by the Coastal Housing Group. Nearby properties were also said to be rented out by Coastal. The obvious thing to do was check with the Land Registry, where the mystery was cleared up . . . sort of.

Yes, 5 Penmaen Terrace is owned by Link Holdings (Gibraltar) Ltd, but there is a leasehold agreement with Coastal. The details can be found here in the freehold title document, and here in the leasehold title document.

Though remember that Coastal is a relatively new organisation, registered on April 1, 2008 and formed through the merger of Cymdeithas Tai Dewi Sant (1991) and the Swansea Housing Association (1978). Which means that although Coastal is named as the registered owner and proprietor (of the lease) on 04.02.1983 this must have been the Swansea Housing Association.

The two ‘Restrictions’ dated 23.04.2008 would appear to be some kind of recognition that the merger and reorganisation had taken place.

Scrolling to the end of the leasehold document, under the ‘Charges’ (loan, mortgages, etc.) heading brings us to this entry: “(04.02.1983) Proprietor: The Housing Corporation of 149 Tottenham Court, Road, London W1T 7BN.” This quango was the body that oversaw and funded housing associations between 1964 and 2008. I assume it ceased to have any authority in Wales after devolution.

An assumption that seems to be confirmed by a later entry reading: “(12.10.2000) A Deed dated 4 October 2000 made between (1) National Westminster Bank Plc (2) The National Assembly For Wales and (3) Swansea Housing Association Limited relates to priorities as between the Charges dated 12 January 1983 and 4 October 2000 referred to above as therein mentioned.”

In order to find out exactly what this meant, I contacted the ‘Welsh’ Government with a FoI. I submitted the request on Sunday, October 2, which meant that no one would have read it until Monday, then I had a phone call on the Tuesday from a Regulation Manager at the Housing Directorate! Here’s a section from the written reply that arrived a couple of days later.

link-5-penmaen-terrace-welsh-gov-deed

The answer to my question, ‘How much did the ‘Welsh’ Government chip in?’ would appear to be that the ‘Welsh’ Government put in no money but instead acts as some kind of guarantor for housing associations taking out or revising loans.

Having satisfied myself as to who owns and who leases 5 Penmaen Terrace I decided to look at another property in Swansea owned by Link Holdings (Gibraltar) Ltd, one mentioned in the freehold of 5 Penmaen Terrace, where it says, almost at the end, “(24.07.2006) Registered Charge dated 29 June 2006 affecting also other titles. NOTE: Charge reference WA99891”.

WA99891 takes us to a part of town with which I am more familiar, for this title number refers to the freehold of 379 Neath Road in Plasmarl, the neighbourhood where my father was born and raised. Once a busy road, in fact, the main road from town to Morriston, it has become something of a backwater due to the new road that now runs past the Liberty Stadium and on up to the M4.

The property on Neath Road is a just a terraced house but, again, it’s owned by Link Holdings (Gibraltar) Ltd, though unlike the one in Penmaen Terrace it belongs to those properties bought, or registered, after 24.07.2006. To be exact, 06.10.2006. Another difference is that the lessee in this instance is the Family Housing Association Wales Ltd. And the money to fund the lease came from Orchardbrook Ltd.

family-housing-association

I couldn’t get a great deal of information on Orchardbrook, for one thing, it doesn’t seem to have a website, but I did turn up minutes from a 2009 meeting of the York Housing Association, which say, “The Chair explained that Orchardbrook (a subsidiary of the Royal Bank of Scotland) took over all Housing Associations loans and the interest rate specified was high.” Suggesting that when the Housing Corporation was wound up in 2008 its assets, in the form of loans made to housing associations, were sold off.

So the Charge entered against the leasehold title of the Neath Road property in 2014 probably means that Orchardbrook ‘revised’ the terms of the loan it had inherited from the Housing Corporation.

We don’t want to get bogged down in the minutiae of Land Registry documents so to explain a little more I’ll use the Zoopla website. Link Holdings (Gibraltar) Ltd owns hundreds of properties in Swansea and many more across the south (but none west of Llanelli).

For example, Link owns many properties on relatively new developments in the Llansamlet area, in Brynteg, Ryw Blodyn, Lon Brynawel and Clos Eileen Chilcott and other streets. Using the data I’d compiled and cross-referencing with Zoopla and other property websites we find that most of these properties are leasehold.

link-clos-eileen-chilcott

Obviously I can’t check all Link’s properties, there are just too many, but I suspect the same picture will be found elsewhere: older properties – especially large ones and Houses of Multiple Occupation like those in Penmaen Terrace – are leased or rented to housing associations, with newer properties – bought as buy-to-lets – are privately leased or rented. Though I’m not ruling out that newer properties might also be leased or rented to RSLs.

Which leaves the big question – what exactly is Link Holdings (Gibraltar) Ltd, and who’s behind it? Against my better judgement – knowing I wasn’t going to learn much – I shelled out £15 for a company profile from Companies House in Gibraltar.

While the big question – ‘Who owns Link?’ – goes unanswered, the profile does advance our knowledge in other areas. It tells us, for example, that Link was incorporated in Gibraltar on September 11, 2003.

Digging around in the FCA website turned this up, which tells us that on 24.02.2006 Cymru Investments Ltd of Jersey changed its name to or merged with Link Holdings (Gibraltar) Ltd. This might explain the rush of registrations with the Land Registry a few months later, for this could be the Cymru Investments portfolio being registered under the new name.

link-fca-info-name-change

Though given that Link was Incorporated in Gibraltar in September 2003 what was it doing in the intervening period?

You’ll also see that the name Cymru Investments Ltd had only been used for a year or so, so was there a previous name? Yes there was, as this document from the Jersey Financial Services Commission tells us. From 10.09.1991 to 15.02.2003 Cymru Investments was known as Rastlebeg Investments (Jersey) Ltd, and before that, from 14.03.1974, the company went by the name of Gwalia Investments Ltd.

Something you may have picked up on is that there’s a gap of 23 months between Jersey saying the name Rastlebeg ceased to be used (15.02.2003) and the FCA telling us that the name Cymru investments was adopted (08.01.2005). Is this a typo, or was another name used in this period?

link-jfsc-name-change

In the hope of getting to the bottom of things I decided to buy the original registration document for Gwalia Investments Ltd from 14.03.1974 from the Jersey Financial Services Commission. Here it is. You’ll see that despite what we’re being told, the company was originally registered as Castlebeg Investments (Jersey) Ltd not Gwalia Investments Ltd. Yes, that’s Castlebeg not Rastlebeg – another typo? Well, no.

Because further Googling turned up this entry (below) from Hansard. Castlebeg and Rastlebeg are one and the same, so why the different spellings, was the name changed in an attempt to confuse, or is it a repeated typo?

link-castlebeg-hansard

Here’s a link to another Commons exchange from 1986 concerning Castlebeg Investments (Jersey) Ltd. The company was clearly behaving in improper and even underhand ways. There seems to have been some reluctance on the part of the then Conservative government to introduce leasehold reform. The kind of reforms recommended in the Nugee Report.

Having started the previous section by saying I didn’t want to get bogged down in the minutiae of Land Registry documents I’m now in danger of getting us bogged down in information from other sources, so I’ll just refer to a few more scraps of information before trying to pull the various threads together.

This first document, from the FCA, is the one that confirms Link Holdings (Gibraltar) Ltd as the successor to Cymru Investments Ltd of Jersey (see panel above), but there are tabs on it we have yet to explore. If we click on the ‘Principals’ tab we bring up the name of Brian D Thomas Insurance Services Ltd of Swansea. Here’s the Companies House entry.

This company goes back to May 1977 and was chugging along quite comfortably, with total assets less current liabilities of £399,517 at year end 31.03.2005. But then, this thoroughly Swansea company, soon after it gets involved with Link Holdings, is taken over by the Jelf Group of Bristol, undergoes a few name changes, is moved to Bristol, goes dormant, and is finally put out of its misery by being dissolved 07.09.2010.

Interestingly, one of the many names Brian D Thomas briefly traded as in this period was Gwalia Insurance Services. It’s strange how the name Gwalia keeps cropping up, and those of you familiar with the social housing scene will know that there’s a Gwalia Housing Group in Swansea, which recently merged with the Seren Group to create Pobl. Is there a connection?

link-brian-d-thomas-fca-gwalia

You will have noticed that the Principal Place of Business given on the FCA document for Link Holdings (Gibraltar) Ltd is, ‘Cymru Investments Ltd., Po Box 232, Jersey, Channel Islands JE4 8SF‘.

At that same address we find Cymru Management Ltd, Company Number 91117, Registered 06.09.2005. The date of Registration fits perfectly with all the moving and shaking going on, and Link Holdings in the wings waiting to take over. The Annual Return for 2016 informs us that Cymru Management has just two £1 shares issued to Mrs Deanne Mary Pascoe.

Mrs Pascoe is a woman pushing 80 and a director of GUKL Ltd, which I guess is run by another director, Paul Henry Barron Pascoe, a solicitor, who I take to be her son. The registered office is in London, and yet, if you scroll down on the ‘People’ page you come to a couple of names and addresses from the city of my dreams.

One is Zoe Teresa Brooks of Killay, and the other is James Christopher Coughlan of Llansamlet. Both served as directors for just six weeks, from 15.05.1995 until 30.06.1995. And when appointed Ms Brooks was only 18 years of age! Mr Coughlan is a builder, and had his own firm for a short time. It appears Ms Brooks did not trouble Companies House ever again.

Digging into the history of GUKL tells us that it began life in March 1990 as Cruisebase Plc, but the name was soon changed, in July 1990, to Golfads (UK) Plc, and again in October 2015 to GUKL. Would it be reasonable to assume that the current name means Golfads UK Ltd? And if so, what the hell does such a company have to do with Link Holdings (Gibraltar) Ltd?

It might be worth adding that even though a number of sources suggest Cymru Investments morphed into Link Holdings it still exists in some ethereal form, using the same number, 8431, as this Annual Return for 2016 to the Jersey authorities tells us. Five thousand £1 shares held by Link Holdings (Gibraltar) Ltd.

I feel a bit like old Gildas writing De Excidio, where he talks of having made a ‘heap’ of all he’d found, because I’ve collected a lot of information but I’m still not sure what it tells us. Anyway, let’s try to make sense of it. (And I need your help.)

We know from Hansard, quoting Ron Davies and Nicholas Edwards, that there was a leasehold company operating in the mid-1980s named Castlebeg Investments (Jersey) Ltd. This company was also and variously known as Cymru Investments (Jersey) Ltd and Gwalia Investments (Jersey) Ltd. Though the jury is out as to whether it also called itself Rastlebeg or whether this was a clerical error. As the names suggest, all these companies were based on Jersey in the Channel Islands.

This company leased both to private individuals and bodies such as housing associations. It may or may not have also rented properties. Then, after being Incorporated in Gibraltar 11.09.2003 (but, according to the FCA, still using the Jersey address of Cymru Investments Ltd) Link Holdings (Gibraltar) Ltd took over or became the latest incarnation of Gwalia/Cymru/Castlebeg. Probably confirmed with the splurge of Land Registry registrations of 24.07.2006.

It doesn’t matter how many sidetracks we follow, or from which angle we choose to approach this subject, there always seems to be a path back to Swansea. Whatever we are dealing with has its origins in or close to that city. But what is it? If Link Holdings is now a massive buy-to-let portfolio, then there is one outstanding candidate for the man behind it. I won’t name him, but everything fits.

It could even be that the Link portfolio today is an amalgam of an older leasehold business, Castlebeg, and more recent purchases by another party of newer properties, such as those in Llansamlet and other parts of Swansea which look as if they could have been bought off plan. So please look at the Private Eye map and the data I’ve compiled, what kind of properties does Link own in your area?

And yet . . . I have this nagging worry that some of the properties now owned by Link Holdings (Gibraltar) Ltd may once have belonged to social housing providers. I hope not. Equally, I hope that Link is not a social housing portfolio that has been moved offshore.

link-gibraltar

What we can be sure of is that Link Holdings (Gibraltar) Ltd is registered where it is a) to pay as little tax as possible, b) to escape the UK regulatory system, and c) to hide the identity or identities of whoever owns the company. That in itself arouses suspicion.

More worrying is that Link and other offshore companies own so much property in Wales. But worse, is that housing associations, bodies receiving hundreds of millions of pounds in public funding, are doing business with Link.

My enquiries covered just one local authority area, and I looked into only one (admittedly large) offshore property company. But I doubt if the picture will be very different in other areas and with other companies. So go through the information I’ve linked to, have a look around your area, and send me your feedback.

We are entitled to know how much Welsh public funding ends up with companies registered offshore. The ‘Welsh’ Government also needs to explain why these deals were entered into. Finally, we must have a promise that there will be no more of these deals, and that Welsh public funding will no longer enrich those who view Wales as a country to be exploited.

END

UPDATE 16.10.2016: The online Guardian today carried a piece about Arron Banks, big buddy of Nigel Farage and funder of both Ukip and the Leave.EU campaign. Unsurprisingly, Banks has accounts in many a tax haven, including Gibraltar, where Link Holdings also hides its loot.

But the connection doesn’t end there, for Banks also uses Parliament Lane Nominees Ltd as directors and STM Fidecs Management Ltd as secretaries, just like Link Holdings. (Read Link Holdings’ company profile.) Probably just coincidence, I suppose, but what if . . .

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John Murphy

I was interested in what you found out about Orchardbrook. I live in social housing (in York) and my housing association is paying between 9% and 16% for finance from Orchardbrook which seems excessive. I wonder how many socially housed tenants are, indirectly, paying these rates.
Have you found anything further about Orchardbrook?
John Murphy

dafis

Your tweet column catches my eye – particularly the report about UKIP “relocating” salaries and expenses to so called staffers based so far east it would be easier for them to work in Holland ! Anyway it’s as much as we expected from that prize turd Hamilton. Almost makes you wish Gill some good luck ( I said almost ! )

Phil Bale obviously won’t be a happy bunny until Cardiff sucks up the entire funding budget for Wales. Well, mate, we don’t buy trickle down theories of economic development and wealth creation especially at those miserly rates funds flow from Kairdiff into other parts of Wales – so go fuck yourself useless piece of shit. Time other coucil politicians in S.E Wales turned on this twat and sunk him, permanently.

Finally your old pal Lord DET has chucked his toys out of his pram ( again ) and fallen out of Plaid and out of love with your favourite repetitive moaning girl. Shame that the two of them didn’t piss off together taking their gaggle of advisers and what passes for policy creators with them. There’s a spare island or 2 out in the Channel or further out to a new Wladfa on the Falklands/Malvinas or Sth Georgia would be just nice.

Garngoch – if local council can’t be bothered then maybe it’s time to call locals to arms – grass cutting, weeding, general tidy up – followed by a glass or 3 could make a nice afternoon out in the sun or the drizzle. How often does he need to go ? I could go for that it’s only about 25 mile down the road and I’m sure there’s some guys who could do with the exercise living nearer. put out the call, count me in

dafis

post script to the above – I see that there’s a petition doing the rounds calling on M’Lord to stand down and compete at a bi-election for his Assembly seat.

Fine idea but full of down sides –
1. he wins,so no end to his carping about being man of the people
2. Plaid substitute wins – we get Leanne endlessly spouting her (new) mantra about being the “Real Plaid”
3.Labour win it ! or even Tories or UKIP – total disaster sets the local community back about 50+ years.

So for now I’d say leave the old twat in situ. He’s no more daft than most of the rest of Plaid and in all probability any replacement would be just as useless, just younger. Now if they could get Elfyn Llwyd or Daf Wigley to run against him you might get a high turn out and a worthy outcome but anything else is just an exercise in electoral fantasy.

dafis

This Rapture mob is new to me, probably cos I missed out on Sunday School too often !. Frankly all this religious shit is normally beyond the boundaries of my tolerance & interest, but when I saw the UN with its mandate for peace etc trotting out that old nonsense I immediately thought that someone was trying too hard to start yet another fight when he/she should have been earning his/her corn working for peace.

dafis

going miles off topic an item on Google News caught my eye. It relates to an UNESCO declaration acknowledging the importance of that Temple Mount in Jerusalem to Islam , but omitting any reference to Judaism. Now I don’t normally have much to do with Jews and their issues, but neither do I deny the Holocaust. This action by UNESCO, a key agency of the UN, seems to be a deliberate construct favouring the Islamic persuasion while shutting out the other “sons of Abraham”

Given that the UN is supposed to bring peace and goodwill, and ergo order, how on earth do they think this kind of nonsense and empty posturing is going to move the world forward ?

Brychan

I wouldn’t expect those running HA’s to be directly owning a shareholding in an offshore property portfolio. I would expect, however, lots of vulture companies hovering around over-geared HA’s waiting to pounce, either for individual property sales, or job-lot disposals.

There is, however, lots of money to be made in ‘management consultancy’.

We’d be looking for people who sit on HA’s boards of management by virtue of being a ‘social tenant’ but has personal wealth and social standing way beyond such a need. You’d be looking for a Swansea version of the former wing commander living in a former council house, villa in Malaga, wife who flashes a Gucci handbag in the local Spar, sort of type. Offshore companies thrive by virtue of the confidentiality that their status acquires.

dafis

KP – Is that the man bagging the nuts, or eating them ?

dafis

Nice to see a middle class Anglo with a soft spot for the Cynon Valley. Obviously being provided with a grant aided subsidised home works wonders in erasing any hiraeth for the decadence of Wilmslow. Is there a public record of all his good works in the community or does it have to be dug up through F.O.I ?

Brychan

RCT Homes is no more.
As from 13th July 2016, it’s morphed into Trivallis Limited (30261R).

dafis

and how much did they shell out to some P.R /Marketing/Image /Creative agency to come up with that staggeringly imaginative moniker ? Tri- fuckin’-vallis, it could only happen in thicko “creative-infested” Wales.

Brychan

Yes.
With the new name to Trivallis came a new CEO, Paul Davies.

He’s formally CEO of Cheltenham Borough Homes before which he was Housing Manage for Cheltenham Borough Council.

He spent four years, 2012 to 2016 as Director of Housing Squared Ltd, a small housing sector asset management consultancy outfit. It should be noted that Housing Squared was founded by himself in 2012, and it’s registered office moved about a bit…..

Based at Ledbury in 2012, (Worcestershire)
moved to Reigate in 2013, (Surrey)
moved to Ledbury in 2014 (Worcestershire)
moved to Kilgetty 2015 (Pembrokeshire)
moved to Upton-upon-Severn. (Worcestershire).

Paul was director of this consultancy business throughout, but was also concurrent director of property and assets for Tai Calon Community Housing in Blaenau Gwent.

He evidently has plans for the social housing stock in RCT.

https://uk.linkedin.com/in/paul-davies-a409a517

His Linkedin profile appears to show him also changing to using his middle name (Paul) during his visit to Pembrokeshire, from is christian name registered at companies house (David), and now lives happily in Swansea. Either that, or he lied on Linkedin and to Trivallis/RCT Homes.

Curious.

dafis

Univ of West of England, previously Bristol Poly, was highly regarded institution for training Chartered Surveyors RICS/CIOB. Lots of aspiring “property professionals” passed through this location especially those who didn’t quite muster the grades for Reading Uni or Land Economy at Cambridge ( the latter notorious for converting post grad rugby players from redbricks into Blues in pre pro rugby era ). Used to be mainly Poly dominated, but since every man and his dog was given licence to become a Uni about 40 offer related full and/or part time degrees in UK

dafis

Treforus’ comment sounds like it’s close to the truth,that maybe it’s all about our archaic leasehold titles which should have been done away with decades ago but vested interests still thrive.

treforus

There was a Swansea estate agent called J Barron Pascoe. From memory his office was on Mansel Street. He bought reversions of estates built by building companies and sold on 99 year leases in the 1970s/80s before it was realised how lucrative an investment they could be. I believe he retired to the Channel Islands and these were his companies into which he placed his property portfolios. If I remember correctly one was known as Gwalia Investments for a short time only because the real Gwalia Housing Association became very exercised by the confusion and demanded or persuaded a change of name. Don’t believe there is any ownership connection with Coastal and I think the original Barron Pascoe died some years ago. Much of the income was earned by requiring house insurance be taken out through a nominated agency as required by most leases but a law change some years ago put a stop to it and allowed leaseholders freedom to insure. They still have the benefit of selling the freeholds and any house with less than 50 years left on the lease will have to have the freehold bought prior to any sale as Banks and building societies won’t accept lower terms left as security.

treforus

I suspect that there isn’t a connection. The Housing Associations simply own houses on long leases as to which Link Holdings own the freehold reversions in the same way as countless other householders in this area. But I may be mistaken.

treforus

BTW , as far as Astley Samuel Leeder is concerned, it was probably previously a partnership but converted to a limited company that year.

Frank Little

Now trying to find the history of the land owned by Link Holdings near the Swansea/NPT border, and probably the site of developments like this: http://www.zoopla.co.uk/for-sale/property/birchgrove/bronwydd/

Wynne

Excellent research again Jac. Very interesting database of property ownership. I hope you receive some interesting feedback now that the information is in the public domain. Compulsory reading for officials at Welsh Government who continue to write large cheques on our behalf without asking the searching questions necessary, and closing the shutters when awkward questions are asked. If housing associations are involved we need openness and transparency. Difficult to keep up with all their antics these days. As you are aware, there is a site in West Wales where a housing association has been granted planning permission to provide a mix of social housing, shared ownership housing and open market housing. I am keeping a close eye on developments and how public funds are being used to develop the site. Nobody in local government or central government appear to have any idea how funds are spent, once allocated. Keep up the good work.

dafis

That’s a hefty piece of research you’ve put together there Jac and that schedule of properties is absolutely mindboggling. Bear in mind that most of it appears to be residential, with odd bits of “vacant” land.

I haven’t yet had a chance to drive past parts of this estate which are near to my home, but questions like – is this speculative against some other future development which could drive up values markedly, or , is it just a “store” of wealth for an individual, family, or cluster of people ? Whatever, the lack of transparency is alarming and our governments’ willingness to deal with such opaque identities is in itself disturbing. No one awake on the job ? no alarm bells ringing ? too much acceptance of this is how it’s done round here ?

Griff

I lost count of the number of “coulds”, “mays”, “mights”, “probablys” and “appears” in all of this.

I’m not sure, also, what exactly is morally or ethically wrong with property, owned by Jersey-based entities, being used for social housing, and how this means Wales is being “exploited”?

Perhaps you could enlighten us why you felt it warranted such a wild goose chase, summed up on a lengthy exposé which exposes, precisely, what?!

dafis

Tending to see things in a simple sort of way I always thought that housing associations were holding their own “assets” i.e housing stock transferred from preexisting local authority ownership, or acquired, or built for letting by that association in its present or a previous guise. I know that there have been a flurry of mergers and takeovers over recent years as the sector “consolidates” and that some of those changes haven’t represented value for the public purse or the tenant community.
However it had never crossed my mind that some of these 3rd sector entities do not own their stock, that they lease them from other parties for terms presumably long enough to give some stability to the chain of contracts.
Going offshore is just that last step to mitigate tax on profits which is a nice legal way of securing avoidance of tax liability. Viewed in the context of a UK wide debate the activities of the tax mitigation industry have now reached a critical point. People who can afford access to these schemes are ducking their responsibility, avoiding their share of social cost and leaving it for those on lower incomes and the few wealthy who have retained a social conscience to fund. While government mouths lots of platitudes about sorting this issue out the reality is that they all come from the same broad slice of society – “I’m all right pal, fuck you”

Marconatrix

Castlebeg sounds distinctly Irish, could there be anything in that?

Brychan

There are no coulds”, “mays”, “mights”, “probablys” and “appears” when it comes to Capital Gains Tax.

This tax is relatively simple. The difference between what a residential property is purchased for and the price which you sell it for, is profit. This is subject to CGT (as long as it is not your main residential home). CGT is payable by individuals who profit if they are in the United Kingdom. Also, if it’s a United Kingdom registered company of limited liability, it is also subject to corporation tax.

There is no Capital Gains Tax in Gibraltar.

This is the reason why property companies ‘off-shore’, although there were some changes to this in the Finance Bill 2015. This issue is that the value of a property depends on the income stream that can be earned from it. Housing Associations in Wales are in receipt of huge amounts of public cash from the Welsh Government and various local authorities. HAs don’t pay corporation tax, and any income from trustees is subject to personal income tax. However, the amount of capital gain enjoyed by the owner depends of the value of it’s lease to the housing body. This gain is ‘off-shore’.

What is morally wrong is where housing associations make great play of being a provider of social housing to the poorest communities in Wales, getting huge public subsidies and claiming to be ‘not-for-profit’ when actually, they are nothing of the sort, as any gain made on the asset is actually snaffled away to Gibraltar. This gain is particularly large if the residential unit was purchased as a ‘plot’, gained planning permission, had social housing built upon it, and then leased to a Housing Association.

You say Jac’s efforts are a wild goose chase. It certainly is. Some types of Wild Geese from Wales are currently flying south for winter. They use Gibraltar as a navigation aid and fuelling stop for this migration. Perhaps they get a grant from the Welsh Government? A nest egg ?

Brychan

Comment 8 (below) is best inserted here.

Marconatrix

OK, perhaps some naive questions, since I only have experience of small private co-operative HA´s :

Why are the HA´s working through these off-shore freeholders, why don´t they simply use their funding to buy freehold property themselves. The loans they raise for this are then serviced through the rents paid to the HA by its tenants. If grants etc. are involved then I imagine this is to allow for more property to be bought or for rents to be lower.

Have all suitable properties in e.g. Abertawe already been ´bagged´ by these off-shore outfits? If so where does their initial capital come from? And why can´t the HA´s get in first? Are the banks etc. reluctant to lent to HA´s (even with the government etc. guaranteeing the loan)?

Or if, as I imagine Jac suspects, there is some kind of stitch-up between the admins of the HA´s and the off-shore companies, how exactly does that work? Good old-fashioned brown envelopes, or something far more subtle?

Also, HA´s can make profits of course (the alternative is to run at a loss for the public purse to pick up on!) but afaik they´re not allowed to _distribute_ their profits, they have to be ploughed back into more housing stock etc. Interest can be paid on loans, but only to a very limited extent. Anyone who invests in a HA has to be warned that their investment is essentially for a good cause, not as a source of profit per se, and such interest as is offered (to use the wording that used to be current, maybe still is) should only be ¨sufficient to obtain and retain¨ necessary funds.

So basically, where is the profit made in the first place, and how is a HA leasing from an off-shore company any different from them leasing from any private property holder who happens to own a house they´re not using. Either it´s leased and someone at the end of the line gets a home, or it stands empty? The freeholder will clearly make a profit, but unless you ban private property and capitalism how can this be avoided, it´s exactly what capitalism is all about, the rich getting richer because they already own assets they don´t personally need that other have to pay to use.

Brychan

Why don’t HAs simply use their funding to buy freehold property themselves?

Because the larger ones are over-geared. They have reached the end-of-the-line on leveraging capital from their existing properties. Once a bank (or public sector finance) has lent them cash on their existing houses, they cannot get any more loans. They either have to buy out other HA’s (lateral expansion) or find capital elsewhere (vertical expansion).

The loans they raise for this are then serviced through the rents paid to the HA by its tenants?

No. A loan secured on property is serviced by value of the property. Income from rents depends on what the housing market can endure. Social Housing earns less than market rate and is eaten up my maintenance and overhead. It is often subsidised by public grants. The only way to yield income from the rent stream is to own the facilities management company which gets the contract to maintain the houses.

If so where does their initial capital come from?

Offshore investment companies have lots of cash; deposits arrive from investors hoping to avoid tax. This money does not sit around like bars of gold. It is used to buy a physical asset fund, like a property portfolio.

Either it´s leased and someone at the end of the line gets a home, or it stands empty?

Yes. In wealthy cities like London, any rental income is small by comparison to the value of the asset and the capital gain. It’s cheaper to ship out the social tenants to the provinces. This is why there are so many prestigious residential buildings, often new build, which remain empty, in London. It’s a ‘bubble’. In poorer areas rental income is generated, someone does get a home, but it’s mainly dependant on taxpayer subsidy.

Is some kind of stitch-up between the admins of the HA´s and the off-shore companies, how exactly does that work?

It’s the business model that exists. HA’s are desperate to expand to finance their footprint. The property portfolio fund managers are happy to acquire freehold to supply them with more housing. Ideally, funding new-build. Low value plots can be purchased and the HA obtains planning permission via the poor-people-housing-shortage sob story. A property gets built, the HA gets more bums in bathrooms, the public subsidy for poor tenants gets bigger, and the profit stream for facilities management operations increase. The freeholder invests in a small value plot and ends up with a high value house in its portfolio, with any capital gain if the house is subsequently sold exempt from capital gains tax as it’s held offshore. The offshore issue was discussed in the Westminster House when legislating the Finance Bill 2015. MPs from London kicked off about the empty condos on their patch. A solution was found to the issue in less well off areas, the proposal being new legislation to provide an opportunity for tenants to purchase their social housing from HA’s. The tenant ends up paying the difference between the acquisition value and the current market value of their house. The capital gain is then liberated, tax free if it’s in Gibraltar.

Hope this explains.