The Mayfair investor overseeing plans that could lead to the eviction of dozens of low-income families on an east London estate has bought a £3.9m country mansion, prompting anger among residents facing homelessness.Mark Donnor, 41, the managing principal of the London office of Westbrook partners, the $11bn (£7bn) US investment firm behind the buy-out of the New Era estate in Hoxton, last year bought the 12-bedroom mansion in the Home Counties, Land Registry documents reveal. The grade II-listed mansion has a lawn tennis court, swimming pool, sauna, gymnasium and butler’s quarters.
New Era tenants have been warned that they face eviction and a tripling of rent-to-market values under Westbrook’s investment plans for the estate, which Hackney council has estimated will force almost half the families into homelessness.
Residents include elderly people, disabled individuals, single parents and NHS workers. They have accused the investors of “social cleansing”.
The Guardian has also established that the investors have placed ownership of the flats in an offshore Channel Islands company, in a move that could allow them to avoid paying UK tax on capital gains, levied as corporation tax.
That arrangement, which is legal, could allow profits to be taken tax-free rather than incur the 20% corporation tax which is levied on the mainland, accountants said. It also means the identity of the owners of the estate is kept secret.
Lindsey Garrett, 35, a single mother who is organising the residents in a campaign to resist the planned evictions, criticised the decision to transfer ownership of their homes offshore. “There’s a moral issue here. They are getting richer off the back of making people homeless. As if that was not enough in itself it seems they are trying to avoid paying back in tax.”
She described Donnor’s personal property wealth as “shocking”. Estate agents’ write-ups suggested his house was about 20 times larger than a two bedroom flat on the New Era estate.
“Here is a man living in a mansion worth close to £4m and he is prepared to make vulnerable people homeless. It makes me so angry. As if they need any more money. Why do they need to put our rents up? Maybe they need another mansion or maybe the butler’s quarters needs extending.”
According to documents at the Land Registry, Donnor last year sold a six bedroom house in Barnes, south-west London, for £4.4m and bought the mansion, which dates from the 16th century. The house, according to estate agents, has been modernised and includes a bespoke Italian-made kitchen and a butler’s kitchen, each with Agas, oak-panelled reception rooms, a topiary garden, paddock, orchard and kitchen garden. The hall is approached via a private drive secured by cast-iron electric gates. The parkland features a large pond and a folly.
“He is rubbing salt into the wounds of 93 families whose futures are insecure,” said Danielle Molinari, 31, one of the residents and a mother of one child. “It is just unbelievable that he has a £3.9m house and we are going to be homeless on the back of his greed.”
Donnor declined to comment about the criticism of his own property investment. Asked about the offshore ownership arrangements he said: “Westbrook doesn’t publicly comment on the detail of the tax affairs of the business. However, we can confirm we are compliant with the tax requirements of all of the jurisdictions in which we operate.”
New Era residents will protest at Westbrook’s office in Berkeley Square on Monday and will march to Downing Street with a 280,000 signature petition to David Cameron to demand the estate’s new owners keep rents at an affordable rate.
Richard Murphy, a tax expert and chartered accountant, said moving the ownership of the estate to Jersey was not unusual for foreign investors but that the opacity of the arrangement was “entirely contrary to the spirit of corporate transparency relating to the beneficial ownership of companies demanded by David Cameron at the G8 in 2013 and reinforced by the G20 in November 2014”.
He added: “This is an arrangement which may well help the beneficial owners avoid substantial tax bills. If they manage to push the rents up threefold the value of the estate will go up and that would mean a substantial capital gain. That could fall out of UK corporation tax which is usually charged at 20% or 21%, because the ownership structure would allow it to be taken in Jersey.”
Company records show that when Westbrook executives took control of the UK-registered firm which owns the estate, all the shares were transferred to a Jersey-registered firm, at the St Helier offices of Volaw, a firm specialising in structured finance vehicles in the tax haven.
Murphy said further tax on dividends from the investment could also be avoided if they were taken by the Jersey entity.
Westbrook issued a statement from the landlord this week saying: “We take our responsibility as landlord very seriously and are committed to working closely with our tenants throughout this period. We are committed to engaging in constructive dialogue with tenants, their representatives and interested local parties.”
The New Era estate was sold in March by shareholders, who included two prominent charities. The Weizmann Foundation, a charity backing a science research facility in Israel, whose vice chairman is the prominent philanthropist Dame Vivian Duffield, owned 15%.
Another 15% was owned by Shaare Zedek UK, a charity that raises funds for a Jerusalem hospital. Its board includes David Bernstein, former chair of the Football Association and now chairman of the British Red Cross.
Martin Paisner, chairman of the Weizmann Foundation, said the trustees did not know about the buyer’s plans and there was no basis on which they could have asked for that information. He said they were obliged to do the best for the foundation, and that was to agree a sale on normal commercial terms.
“Had we had control it is of course possible that we might have viewed our interest differently, but regrettably that was not the position,” Paisner said.
The other owners were members of the Lever family, a company named as Kavanage LLC, which owned a third, and Beatrice Barton who owned the smallest stake.
• This article was amended on Wednesday 26 November 2014. In a caption above we called the imposing staircase at the mansion a spiral staircase. It clearly is not. This has been corrected.
Original Article
Source: theguardian.com/
Author: Robert Booth
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