Aristocratic landowners with connections to the family of former prime minister David Cameron, mysterious Dublin-based shell companies that pay no tax, and groups based in the Channel Islands are among the freehold owners that appear to have made millions from spiralling ground rents.
When Guardian Money attempted to trace the ultimate ownership of the five-bed detached home bought by Jo Darbyshire in Bolton, we uncovered the pass-the-parcel world of freehold speculation.
Darbyshire, 46, and her husband Mark, 47, bought their home from Taylor Wimpey in 2010, and are among thousands of leaseholders on “doubling” ground rent contracts, meaning the sum paid doubles every 10 years.
Two years after the Darbyshires completed their purchase, Taylor Wimpey sold their freehold to a company called Adriatic Land 2 (GR2). It is not known how much Taylor Wimpey earned from the deal.
In January 2017, that freehold ownership was transferred to Adriatic Land 1 (GR3), while some of Darbyshire’s neighbours have seen their freeholds transferred from Adriatic Land 2 (GR2) to Abacus Land Ltd. “You have no idea who owns the land under your feet,” said Darbyshire. “Your dream house is traded from one offshore company to another for tax reasons, or who knows what else?”
Adriatic Land 1 (GR3) is registered at Companies House with an address at Palmer Street in the heart of Westminster, London. The documents show that one of its directors until late 2013 was “the Honourable William Waldorf Astor”, the half- brother of David Cameron’s wife, Samantha.
Astor runs the fund manager Long Harbour, which invests in residential freeholds, and is also director of HomeGround, which administers freeholds on behalf of various landlords, including the Adriatic Land vehicles.
The website for the Long Harbour ground rent fund boasts: “Since closing our first transaction in 2010, Long Harbour has acquired over 160,000 residential units comprising approximately £1.4bn of assets to date.” It says many of the investors in its fund are pension groups looking for a secure long-term income.
A Long Harbour spokesman said it met all of its tax obligations, adding that investors in its unit trusts and limited partnerships “are responsible for payment of any of their own taxes”.
He added: “The investment funds in the Long Harbour ground rent fund are UK-based pension and life assurance funds seeking a long-term inflation-proof income and as such are tax exempt.”
Since 2013, Darbyshire’s freeholder, Adriatic Land 1 (GR3), has listed its directors as individuals based in Dublin, and says its ultimate controlling party is Jetty Finance DAC, registered in Dublin. Its last reported accounts show the company had £19m in property assets and earned an income of £1.9m, on which it made a profit of £1.3m. In the year to March 2016 it paid zero corporation tax; there is no suggestion of any wrongdoing.
There are numerous other Adriatic Land companies registered at Companies House. Adriatic Land 4 (GR1), for example, has interests in £27m worth of property, with its immediate parent company listed in Guernsey in the Channel Islands.
E&J Estates is another major buyer of freeholds from developers. Lindsay Lloyd in Ellesmere Port, Cheshire, bought her three-bed semi from Taylor Wimpey in 2009, but as a 22-year-old with little spare cash – and told by her solicitor that the ground rent would not be a burden – decided against paying £2,625 for the freehold.
A few years later the 999-year freehold was sold to E&J. When she approached the company to buy her freehold, she was initially rebuffed. After pressing for a quote, she says she was asked for £32,000. “I just thought they were having a laugh. The property only cost us £155,000.”
Lloyd, who works in a creche, said she was unable to afford the £32,000. Meanwhile, her ground rent doubled from £175 a year to £350 a year on 1 July, despite promises by the developer, Taylor Wimpey, to help out buyers with a £130m assistance scheme.