Revealed: the Kremlin’s £200m London buy-to-let property empire

Russian state-owned residences risk being seized in wake of unprecedented legal battle

At first glance, the imposing £35m Victorian Grade-II-listed mansion on Holland Park in the heart of affluent west London does not stand out. But in fact the three storey, six bedroom white stucco house has a secret history. For the past 60 years, it has been a London residency for Russian intelligence officers and diplomats.
In 1983, an MI5 officer called Michael Bettaney walked to the front gate and dropped an envelope containing security files on three Soviet agents through the letterbox. The inhabitant – KGB station chief Arkadi Gouk – assumed it was a sinister trick and ignored the approach.
But the documents were genuine. It was a crude and naïve attempt to sell state secrets and the unstable Bettaney was later jailed under the Official Secrets Act.
Today the Holland Park residence is still owned by the Russian state and could be embroiled in a different type of controversy in the new Cold War. The house is just one of many Russian state-owned properties in London worth an estimated total of £200m which could be seized in the light of last week’s unprecedented legal charge against a plot of land in Kensington.
The charge was obtained by the former shareholders of Yukos Oil after the Kremlin failed to comply with a High Court order to pay their legal costs. The shareholders are suing Russia for the illegal expropriation of their investments when Yukos was nationalised without compensation.
In 2014, a court awarded the Yukos investors $50bn (£40bn) in damages. Russia has refused to pay and argues it is protected by sovereign immunity. This claim was rejected by the courts last November. But when the High Court ordered the Kremlin to pay their £960,000 legal bill, they refused. The former Yukos shareholders will acquire ownership of the land if Russia fails to successfully appeal the ruling by April.  
The land – based at 245 Warwick Road, west London – was bought in 2006 for £8m by the Russian Ministry of Foreign Affairs and VTB, a state-owned bank, using a Jersey company called Embassy Developments. The plan was to build 255 luxury flats and sell them at vast profits.
“The income of Embassy Developments and any surplus remaining shall belong to and be distributed to the Government of the Russian Federation,” stated the company documents.
The new charge on this land leaves Russia vulnerable to more legal action regarding its UK properties. The Telegraph has identified 16 houses and flats in Holland Park, South Kensington, Chelsea, Fulham, Highgate and Kensington owned directly by the Russian Federation with an estimated value of £200m, according to Land Registry records.
Many are clustered near Highgate, north London, which is popular with Russian diplomats and oligarchs. But some houses and apartments are based on less fashionable roads in Fulham and Camden.
The Russian Embassy claims that all overseas properties are used for diplomatic purposes and so immune from being sequestrated by a court. But The Telegraph has established that in recent years some flats in these houses have been rented out to British and foreign individuals.
In 2011, a vast £30m mansion on Holland Park was divided into five flats which have since been rented out to a City broker, a public relations manager and an IT consultant. A recent planning application was submitted by a Russian construction company which has handled state contracts, notably for Gazprom. 
Across town in South Kensington, a £15m house owned by the Kremlin was split into five apartments and rented out to a Swiss business school graduate, an Iranian management consultant and a British property developer. And a mansion on Highgate West Hill was occupied by a British family for many years.
Around the corner in Highgate, a nondescript two storey house is occupied by a senior Russian trade mission official. But Companies House records show the primary resident is a Russian businessman who is a director of at least nine UK companies in the public relations and travel industry. His longest-serving directorships were with a travel company which during the Cold War worked primarily for the KGB in Moscow as tour guides.
Officially, only three Russian properties in the UK are listed as diplomatic premises by the Foreign Office. They are the Embassy on Kensington Palace Garden and the defence attaché’s office and the trade delegation of Russia based at Highgate West Hill, north London.
Some of the houses discovered by The Telegraph are understood to be  occupied by Russian spies and officials and an Embassy spokesperson maintains “diplomatic premises and homes of embassy staff are protected by diplomatic immunity”.
But there is growing pressure to change the law so Russian sovereign assets used for diplomatic purposes are confiscated because Putin’s war in Ukraine is illegal. Bill Browder, previously the largest foreign investor in Russia, believes it is feasible by new special legislation.
“Putin cannot break international law in every possible way and be assured this law will protect his frozen central bank reserves and assets,” he told The Telegraph. 
“The UK government has been unimaginative about the legal possibilities for a long time. If you are Rishi Sunak and you ask your advisors ‘Can we confiscate the Russian money?’, the (government) lawyers will say ‘No, it is illegal, they are protected by sovereign immunity’. But if you are the Prime Minister, you can ask a different question which is ‘Is there a legal way we can confiscate the money?’, and he will receive a different response which is ‘Yes, if we use the law on countermeasures which allows victims of damage to make claims on the perpetrators’. This law trumps the law on sovereign immunity. The reality is you can legislate anything you want”.
The seizure of Russian state assets is now part of a wider initiative to liquidate sanctioned state assets for the reconstruction of Ukraine. When asked recently about the feasibility of spending not just the assets but also some of the interest, Lord Cameron replied: “There is a legal route to doing this”.
Lord Ricketts, a former UK national security advisor to the Prime Minister, said that “his tantalising comment suggested to me there is active work going on in government to try and overcome the obstacles”.
Later this month, G7 leaders will discuss a new legal strategy that could enable the seizure of $300bn of Russian frozen funds in western banks which could be used for the reconstruction of Ukraine. An estimated £28bn of Russian Central Bank reserves is held in the UK. 
Last week’s first successful charge over a Russian property in the UK creates a legal precedent for potential future enforcement of seizing assets owned by the Kremlin.
“Russia’s refusal to comply with court orders cannot be without consequences,” Tim Osborne, chief executive of GML who represents the former Yukos Oil shareholders, told The Telegraph.
“This first charging order against a Russian state-owned property in London demonstrates what those consequences are – the property assets owned by the Kremlin can be enforced against when Russia refuses to comply with court orders. Russia can either comply and pay or face losing its assets.”
The Russian Embassy was contacted for comment.