16/05/2022

16/05/2022

UK Property – Overseas Owners

UK Property – Overseas Owners

The UK’s Economic Crime (Transparency and Enforcement) Act 2022 is being fast-tracked in March 2022 through Parliament.

 

The Bill will include the introduction of a new Register of the beneficial owners of overseas entities that own property in the UK.

 

The new “Register of Overseas Entities” (ROE) will be maintained by the UK Companies House. It will include information on overseas entities that own UK property and their beneficial owners. Any overseas entity wishing to own UK land will need to identify and register the beneficial owners.

 

A beneficial owner will need to be registered if: they hold more than 25% of the shares or voting rights in an entity; can appoint a majority of its directors; or have some other significant influence or control over it (including through a trust or partnership structure).

 

The Act imposes an annual information update obligation on overseas entities. There will be offences for non-compliance, several of which are potentially punishable by fines and imprisonment.

 

Companies House will allocate an "overseas entity ID" number for each entity registered.

 

Failure to register (or submitting false information) will be a criminal offence and will also prevent the entity from being able to buy or sell (or mortgage) UK property in future. A transfer of land by an overseas entity in breach of the registration requirement will be a criminal offence committed by the entity and every responsible officer, which is punishable by a fine or up to five years’ imprisonment. Some information on the register – including the identities of overseas entities and beneficial owners – will be open for public inspection.

 

The requirement to register will apply retrospectively to land bought on or after 1 January 1999 in England and Wales, and 8 December 2014 in Scotland.

 

Overseas entities will have a six-month transitional period from the Act coming into force to dispose their land or register. In Northern Ireland, the requirement to register will only apply prospectively.

 

The Act creates a new duty on the UK's land registries to place restrictions on titles to qualifying estates registered to overseas entities before the end of a transitional period. This will have the practical effect of restricting overseas entities' ability to transfer, let (a lease of more than seven years) or charge their relevant interest unless they have complied with the new law.

 

Any transfer of, grant of security over or grant of a lease of UK property from 28 February 2022 will trigger an obligation upon them to register by the end of the six-month transitional period. It is not yet certain when the regime (and therefore the six-month transitional period) will commence. It is expected the register will take time to be set up.

 

The Bill was ratified in March 2022 to become an Act of Parliament. The scope and interpretation of the Bill will become clearer with the publication of the Regulations and guidance.

 

Other jurisdictions will be obliged to follow the UK. Discussions are already underway with the UK Government for the Registers of Beneficial Ownership in British Overseas Territories (including the BVI, Gibraltar, Cayman Islands and Turks & Caicos Islands) and the Crown Dependencies (Isle of Man, Jersey and Guernsey) to be made public by the end of 2023.