Buyer anonymity is one of the big talking points in real estate right now, as a fascinating case plays out in the US involving a recent mansion purchase by the second richest man alive – Jeff Bezos. Here, lawyer Hugh Wigzell explains what happens when identity becomes a factor, and what wealthy clients need to know about protecting themselves commercially in a potentially sensitive transaction…

When a purchaser of a property has extreme levels of wealth, it is not unusual for them to take precautionary steps to try to ensure they do not pay above the correct price and to then seek to limit their public exposure as the owner of the property going forward (writes Hugh Wigzell).

If the identity of a wealthy buyer is known from the outset, there is a risk of them being exploited by a seller who might feel the buyer’s pockets will be deep enough to wear an extra million or two on the market value of a property. This is especially true for special purchasers, like next-door neighbours or adjacent apartment owners, for whom the property inherently holds more value than it would for most buyers, as Leo Kryss and Jeff Bezos have recently brought to our attention.

Ultra-high-net-worth clients can seek to protect themselves commercially at the outset of a transaction by approaching a seller via an agent to act as broker and agree the price on a no-names basis. This gives the buyer comfort that a professional has negotiated the price, and they can take advice from the buying agent on whether they are getting a fair deal. From time-to-time law firms will also make offers on behalf of their clients in a similar way, although we cannot provide any guidance on value.

Once the price has been agreed, maintaining secrecy as to a buyer’s identity becomes more difficult. This can be approached through nondisclosure agreements or confidentiality provisions within an exclusivity agreement or the contract itself.

However, nondisclosure agreements and confidentiality provisions are not perfect as enforceability can be problematic. While you can pursue a party for losses and damages if they breach these provisions, often the damage to privacy is already done, and there is no quantifiable loss: very little can be done to reverse the position beyond pulling publications from online platforms.

Wealthy individuals often want to keep their names off public registers, which is problematic as the Land Registry is publicly accessible. In the past, offshore companies were used to protect the privacy of the ultimate beneficial owner of the property. However, such privacy wrappers have been severely eroded by the introduction of registers of overseas owners and tax reform.  It is still possible to hold properties through structures and on trust, which can provide a privacy buffer as Land Registry records will just reflect the entity holding legal title to the property. However, further diligence could be undertaken by a curious party to discover the ultimate owner of the property.

Whilst there are many good reasons to preserve privacy, the UK’s public registers will only recognise excellent reasons

Whilst there are many good reasons to preserve privacy, the UK’s public registers will only recognise excellent reasons: namely the interests of national security or for the purpose of preventing or detecting serious crime. If you can evidence this then there are grounds to apply for ownership not to be registered, but this is an extremely high bar.

Nominee ownership by a trusted individual on bare trust terms is another option, albeit rarely used. This would entail another person acquiring and holding the property on trust for the secretive beneficial owner. Trust here is the operative word, and the trust should be registered with HMRC (so the taxman will know who owns the property).

No method is foolproof and, as we explain to clients, it only takes one indiscreet guest or a mis-placed photo on social media to compromise privacy. It is very difficult to absolutely maintain privacy and something can be said for hiding in plain sight and just owning the property under your natural name.

Security concerns also arise with online marketing materials containing floor plans and pictures of the property.  Steps can be taken before exchange of contracts to ensure the copyright of all images is owned by the buyer, which will then give them power to ensure these are taken down post exchange.

Planning applications are also in the public domain and can contain sensitive information. It is possible to hold preapplication meetings with the planning authority to try to persuade that there is a good enough reason why certain information should not be published publicly. Planning applications can also be submitted in the name of a third party, such as an architect or planning consultant, to preserve the identity of the owner.

In conclusion it is very difficult to ensure absolute privacy of home ownership, however proportionate steps can be taken to assist buyers who value their privacy.