Insights 17.5.22 Author: Sabina Burke

Register of overseas entities to impact all non-UK resident landlords and foreign owners of UK property and land

Insights 17.05.2022 Author: Sabina Burke

In light of the conflict in Ukraine, the UK Government is fast-tracking the introduction of the ‘Register of Overseas Entities’, which received Royal Assent on 14 March.

The new rules require any overseas entity that currently owns or wishes to acquire UK property or land, to register with Companies House and provide details of its beneficial owners within six months of the register going live.

Once registered, an overseas entity ID number will be provided and the entity will be required to update its information annually, until such time as it successfully applies to be removed from the live Register of Overseas Entities.

After registering, the name of the overseas entity and its beneficial owners will be publicly available on Companies House.

This is part of a wider strategy to give the Government greater transparency over the identify of foreign owners of UK property in order to highlight and combat criminal and fraudulent activity.

So, what defines an overseas entity and who does this apply to? 

The Register will apply to both commercial and residential land and property, and to freehold and leasehold interests (with some limited exceptions) held by an overseas entity (i.e. any company or similar legal entity, corporate, partnership or other entity that is a ‘legal person’ as governed by the law of a country or territory outside the UK.)

The Register does not specifically apply to overseas trusts that own land directly in the UK, as trusts are not separate legal persons. However, it is very common for trustees to hold assets through corporate vehicles or through corporate nominees and those entities will be affected.

There is however a separate UK Trust Registration Service which applies to overseas trusts holding UK property and more information about that can be found here.

When will it go live? 

The Bill received Royal Assent on 14 March and is expected to go live shortly.   Once the property register is live, overseas entities will have just six months to register and disclose details of their ultimate beneficial owners.

Companies House has advised that it will soon be writing to all overseas entities captured by the Act who own land in England, Wales and Scotland to make sure they know about their new responsibilities.

What will happen if they don’t? 

The consequences of failing to register could be severe, resulting in criminal and civil penalties. 

Overseas entities will not be able to buy, sell, transfer or lease land, or create a charge against the land in the UK unless they’ve registered with Companies House.

What next? 

At CBW we work with many overseas UK property owners (including non-resident landlords) who will automatically be affected by these changes and will therefore be obligated to register and disclose information on the Register of Overseas Entities.

As soon as the register goes live, we will work with relevant clients to ensure the beneficial owners of such entities are registered with Companies House (which is where the register will sit), and the required information is maintained and updated on an annual basis.

In some cases, business-owners may now wish to consider whether the ownership structure of their UK land interests remains appropriate, as many of the tax and privacy advantages of holding the UK property interest through an offshore structure are now limited. 

If you hold, or are planning to acquire a UK property, and think you may be affected by the new Register of Overseas Entities legislation, please contact us now.