Overseas landlords rent out 4000 homes in Glasgow — with 1000 through tax havens

Scottish Government guidance warns local authorities, which are responsible for vetting landlords, that “the private rented sector is attractive to criminals as a means of laundering money through property ownership and management”.

But an investigation by The Ferret, involving cross-referencing the landlord register with Freedom of Information requests and a database of Scottish offshore property, can reveal that hundreds of Glasgow flats were being let from owners registered in tax havens.

It found that 1,460 homes in Glasgow are linked to landlords registered in jurisdictions named in a top 10 corporate tax haven ranking produced by the Tax Justice Network.

The landlord register was set up to protect private-sector tenants by providing “a public register of all private landlords for public inspection”. But in many cases the register provides no way to determine the true or “beneficial” owner of property from the published information.

In one case, the only contact available for a Glasgow city centre flat on the landlord register was a PO box address in Dubai.

Mystery owners

The Ferret determined independently that the same flat was owned by a company registered in the British Virgin Islands, where it is not possible to identify the beneficial owner.

The investigation identified a Glasgow letting agent that is ultimately controlled from Dubai. According to the landlord register, it acts as the agent for a portfolio of rental properties in the city. Many of these properties are owned through a separate Bahamas-based firm.

Although the Glasgow letting company has a similar name to the Bahamas-based property company, there is no way to establish whether they have the same beneficial owners using the information publicly available. There is also no way to determine who has invested in the offshore property firm, or whether the two firms are controlled by the same people.

Both landlords and letting agents must be assessed by a council as “fit and proper” before they can be put on the landlord register. But Scottish Government guidance currently assumes that the process will not be “onerous” and largely relies on self-declaration.

Tax evasion and money laundering are recognised as legitimate reasons to strike a landlord off the register.

Although the register is published online, current legislation requires councils to limit the amount of information they disclose about landlords and the property they own.

When a company is the owner of a property on the register, often only the name of the company is provided. But the company address, the name of the beneficial owner, or even the jurisdiction where it is registered may be withheld.

It is not illegal to rent property in Scotland that is owned offshore, or to do it using a company, and there are many legitimate businesses that operate this way.

But the outbreak of war in Ukraine has seen increasing concerns raised about the role that the UK has played in enabling foreign kleptocrats and oligarchs to hide so-called “dirty money” – often by purchasing UK property through a series of firms registered offshore in secrecy jurisdictions.

Independent MSP Andy Wightman in the main chamber of the Scottish Parliament, Edinburgh, during the debate on the motion of no confidence against First Minister Nicola Sturgeon. An investigation into the Scottish Government's unlawful handling of

Loopholes

AS a consequence, the UK Government has introduced long called for legislation as part of its Economic Crime Bill – to force foreign firms that own property in the UK to declare their ultimate owners.But land reform campaigner Andy Wightman said that these proposals will only close some of the loopholes on the property register.

He called for Scottish property laws to be strengthened, including the landlord register, so that it is easier to identify who really benefits from the ownership of Scottish property.

“There’s a strong argument for strengthening the landlord register so that it is updated more frequently, provides more detail, and allows people to cross-reference it with other land ownership information,” he said.

“If you ask me, no property should be owned outside the UK, and that just gets rid of concerns over transparency. This would bring these properties into UK regulation and cut the chances of abuse.”

His call was echoed by academic Dexter Whitfield, of the European Services Strategy Institute.

He said: “Every tenant should have the right to know who the landlord and letting agency is, where they are located, and have evidence that a ‘fit and proper’ assessment has been carried out.

“Clearly, a landlord living overseas presents great difficulty but that is even more difficult if they are registered in a tax haven.

“That should be banned full stop. Any person in a tax haven is not a ‘fit and proper’ landlord to rent property in any part of Scotland.”

In some council areas up to 9 per cent of all homes in the private rental sector are owned by offshore landlords.

No transparency

CITIZENS Advice Scotland policy manager Stephanie Millar said that a lack of transparency on the register may put private sector tenants at a disadvantage. “The landlord register is supposed to reassure tenants that their landlords are fit and proper people to be letting property. We would call on the Scottish Government to ensure greater transparency in the landlord’s register to guarantee that tenants are able to assert their rights.”

A Scottish Government spokesperson said that measures to provide more information to the public on beneficial owners of property were due to “go live” in April.

They also said the current landlord registration system was under review with the aim of “strengthening the process”.

“Private-sector landlords in Scotland are subject to the same regulatory requirements irrespective of where the ownership is registered, helping to ensure the landlord is a fit and proper person.”

The spokesperson added: “We support measures to ensure individuals and businesses pay a fair amount of tax.

“The majority of tax powers are reserved and only the devolution of further tax powers to the Scottish Parliament will allow us to fully clamp down on tax avoidance.”

This story is a Ferret Investigation, co-published with The Herald. Support journalism by becoming a member for £5 a month. https://theferret.scot/subscribe/