Trusts and gaps in property ownership data: new research
In September, we were happy to collaborate with our friends at the LSE and the University of Warwick on a data-driven research paper looking at how effective data reforms to improve the transparency of property ownership have been - and where data gaps remain.
We found that over 70% of properties in England & Wales held via overseas companies (109,000 out of 152,000) still do not publish information about who really owns them - despite government commitments to crack down on anonymous ownership of UK property.
The paper found that:
for 35% of properties owned via overseas shell companies (54,000 properties), even law enforcement agencies do not know the true identities of the beneficial owners
in 10% of cases (15,000 properties), the company is missing from the new Register of Overseas Entities altogether
and in a further 25%, (39,000 properties) essential information has not been reported.
Catch me if you can: Gaps in the Register of Overseas Entities also highlighted that these gaps are overwhelmingly due to design flaws in the Register of Overseas Entities. The register was introduced in response to the Russian invasion of Ukraine with a pledge to “require anonymous foreign owners of UK property to reveal their real identities to ensure criminals cannot hide behind secretive chains of shell companies”.
The paper also found:
In an overwhelming 87% of cases, where the researchers found that beneficial ownership information was missing or inaccessible to the public, it was due to choices by government to keep the information out of scope of the legislation, rather than rule-breaking by overseas companies
Rule-breaking accounts for only 6-9% of cases
Another 4-7% comes from out-of-date or poorly documented records.
The analysis combined data from Companies House and HM Land Registry to quantify the scale of the missing information, and the reasons behind it.
The biggest reason for missing or inaccessible information on beneficial owners is the use of trusts. These account for an astonishing 63% of all properties where beneficial owners are hidden from the public (69,000 out of 108,000). An amendment to the Economic Crime Bill proposed by Lord Agnew – who last year resigned from government over its failure to tackle corruption – would have closed this loophole, but was opposed by the government.
The report made 10 recommendations that the government could adopt to close the gaps identified. Data-related recommendations included:
publishing the title numbers of the properties held via registered overseas entities so that they can be more reliably matched to data published by HM Land Registry
increasing the frequency with which updates to information are notified to and published by Companies House and HM Land Registry, and
publishing the information that Companies House holds about trusts, unless covered by the protection regime for vulnerable individuals.
The government has committed to holding a consultation on the transparency of information around property owned by trusts before the end of the year. We’ll be working closely on this, and are keen to talk to anyone interested - please get in touch.
You can read the full paper over at the LSE.