Channel Island tax haven for sale at £15m

Channel Island tax haven for sale at £15m
An aerial view of the island of Herm
Holly Watt and Steven Swinford

One of the eight inhabited Channel Islands is being offered for sale. The lease to Herm, a 1½ mile “paradise” isle with white beaches just three miles from Guernsey, can be bought for £15m.

Buyers could in effect have their own tax haven, paying 20% on income and avoiding death duties and capital gains, in common with other Channel Islands residents.

Neighbours would include Sir David Barclay and Sir Frederick Barclay, the billionaire owners of the Ritz Hotel and the Telegraph group who bought Brecqhou, a tiny island off Sark, in 1993 for £2.33m.

Herm is the first Channel Island to go on sale for years. The asking price for the 40-year lease includes a manor house, 13th century chapel, 80 acres of farmland complete with a dairy herd and what is thought to be the world’s smallest jail.

Unlike Brecqhou and their nearby sister island Jethou, Herm is open to the public and has become a popular tourist destination. Under the terms of the lease, the owner must allow tourists on to the island from “sunrise to sunset”.

The current owners, Pennie and Adrian Heyworth, have run the island for 28 years following the tenure of Pennie’s father Peter Wood.

“For the last 49 years our family, together with island residents, have transformed what was a derelict island into the thriving and successful tourist haven it is today. We look forward to enjoying visiting Herm with our children and grand-children (hopefully!) without the responsibility of running the island,” Pennie, who was born on Herm, said.

Life on Herm offers a unique escape from the pressures of modern society. The island has no roads and the eastern half is fringed by sandy beaches, rising into sea cliffs to the west and south, which offer spectacular views across to Sark and Jethou.

The most noted beauty spot, Shell beach, famed locally for its pear-white sands, is speckled with thousands of tiny coloured shells.

The new owner is likely to find privacy in the main residence, a four-bedroom manor house, and neighbouring fortified keep, which has been converted into three flats. The estate is surrounded by a granite wall and includes a swimming pool and ornamental gardens.

Tourists, however, are unlikely to be far away. On the south of the island the three-star White House Hotel has 40 bedrooms, while there are 18 self-catering cottages, log cabins and apartments. There is also an 80 pitch campsite to the north.

The island has two pub restaurants, two beachside cafes and piazza with three shops and a small post office. It comes with a 22-ton landing craft, called the Herm Seahorse, and the tenant is required to operate at least one ferry boat a day between Guernsey and the island.

In the summer, up to 150 staff live there and help run the island, falling to 50 in winter. While the lease stipulates that the owner has to keep the island open to visitors, the estate agents admit the buyer could strip tourist facilities to a bare minimum and dismiss staff. Some residents, who have lived on the island for up to 23 years, are alarmed by the prospect of a change of ownership.

However, Richard Fox, director of Martel Maides, one of two estate agencies behind the sale, said the new owner would “no doubt” be sympathetic stewards.

Rupert Sweeting, from Knight Frank, the other agency, was more emphatic: “There are no conditions to keep the staff on, but anyone going in would be absolutely mad to sack them all.”

The agents believe it would be suitable for a wealthy young family keen to get involved with the running of the island, or a hospitality company.

Herm has a rich history with strong links to France. Normandy gave up rule of the Channel Islands in the 13th century, but Herm remained a refuge for Norman monks until the 15th century. In the 19th century, the island had a series of wealthy and colourful tenants including Prince Blucher von Wahlstatt, a German royal whose great-grandfather helped Wellington defeat Napoleon at Waterloo, Sir Compton Mackenzie, the author, and Sir Percival Perry, once chairman of Ford Motors.

During the war it was occupied by the Germans, who used Shell beach for a propaganda film claiming to show the successful invasion of the Isle of Wight. By the time Pennie’s parents took over the island in 1949, it was derelict.

Over the decades the family has owned Herm they have painstakingly transformed it into a tourist destination. Adrian Heyworth, who doubles up as the island’s part-time policeman, said: “It is quite simply the most beautiful island in the world.

“We have been so happy here and we will miss it very much, but we feel so privileged and fortunate to have brought up our family here.”

Costly retreats

1976: Sir Richard Branson purchased 74-acre Necker in the British Virgin Islands for £130,000

1993: Sir David and Sir Frederick Barclay bought Brecqhou, a 200-acre Channel Island, for £2.33m

2006: Sheikh Mohammed bin Rashid al-Maktoum gave Michael Schumacher one of the “World” artificial islands in Dubai worth £3m