The body representing regional government in England and Wales has called for more taxation to be retained by local councils in the wake of two huge London property purchases by a US hedge fund billionaire.
Three of the most expensive homes in the world have been sold recently to one man, American financier Ken Griffin, who has become known for spending his fortune on lavish properties in some of the world’s most glamorous cities. All of the latest properties have been eulogised as stunning.
Two of the houses are in central London, and will attract taxes that will be banked by central rather than #local government. One, a penthouse currently under construction, will overlook Buckingham Palace at Hyde Park Corner as part of the Peninsula London development and will cost £100m. Another is a townhouse across the park at Carlton Gardens, costing £95m. The third is a penthouse atop a “pencil tower” at #New York’s 220 Central Park South, costing $238m (£200m).
In the US federal system, New York City levies the taxes due on property purchases and will receive $217,000 a year from Griffin’s New York purchase, according to calculations by property tax consultants MGNY Consulting.
However, in the UK, most of the taxes due on Griffin’s two latest purchases will end up going to central government, aside from the £2,842 per year in council taxes due to Westminster council and the Greater London Authority for both properties. Griffin appears to be facing a UK bill in the region of £30m in stamp duty for the privilege of being a double neighbour to the Queen, but this one-off sum is paid to central government via HM Revenue & Customs. Griffin, 50, is reportedly worth $8.8bn thanks to the success of his Citadel hedge fund.
Depending on how he structures the purchases of his two new UK homes, he may also face other charges. If the properties are acquired via a company, there will be an annual tax on enveloped dwelling (ATED) of £232,000 a year per property, which is also paid to central government.
However, housing experts say very few residential properties are now acquired through companies, since the introduction of this charge. ATED applies to high-value UK residential property owned indirectly on, or acquired after, 1 April 2013, by “non-natural persons” (NNPs).
A spokesman for the Local Government Association, which represents 370 English and Welsh councils, said: “Local government in England faces an overall funding gap of £8bn by 2025. The UK is one of the most centralised economies in the western world.
“If local areas are given freedom and control over their own finances, and the responsibility for growing their local economies, they will be able to take on increasing and enhanced leadership roles for their place.”
He added that local authorities should be allowed to retain a proportion of nationally collected taxes paid by their residents “such as income tax or stamp duty, along with appropriate redistribution arrangements and control over discounts and reductions where appropriate”.