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Are you looking to buy real estate in the UK with your overseas entity? Here is everything you need to know!

May 30, 2022

If you are are an overseas landlord that owns property in the UK, or are parties who deal with them, you need to be aware of provisions governing the Register of Overseas Entities (the “ROE”) whose implementation is expected in the next few months.

The Economic Crime (Transparency and Enforcement) Act 2022 (the “Act”) establishes a register for beneficial owners of overseas entities who own property in the UK. 

What you need to do as an overseas entity owning property in the UK

Once in force, overseas entities will have a 6-month period to register. The registration requirement applies to both prospective landowners and landowners who acquired property after 8 December 2014 (1 January 1999 in England and Wales).

The application for registration will include certain information about the overseas entity as well as its beneficial owner(s).

In broad terms, a “beneficial owner” is an individual or entity who holds over 25% of the shares or voting rights or has the right to appoint or remove the majority of the entity’s board. If none of these criteria are satisfied, an individual or entity who exerts a similar level of influence or control through other means will be classified as a “beneficial owner”. Where the entity is unable to identify a beneficial owner, has incomplete information about its beneficial owner, or has reasonable cause to believe that it doesn’t have one, information requirements will apply to its managing officers.

Once registered, overseas entities will be allocated an ID number and will be under a statutory obligation to update its information annually (until such time as it successfully applies to be removed from the register).

Overseas Entity IDs will be required to be shared with the relevant land registry (depending on where the land is situated in the UK) whenever the overseas entity buys, sells, transfers, leases or charges land in the UK;

The information shared with the land registry will be required to be updated every year and severe sanctions – such as daily fines and prohibitions on the ability to transact with their land – will be imposed on overseas entities which do not register.

Consequences of non-compliance

The full consequences for non-compliance include criminal penalties (unlimited fines or imprisonment for up to 5 years) and civil sanctions (restrictions on the entity’s ability to deal with its land).

Specifically, an overseas entity without an ID number will not be able to dispose of its UK property. The disposition, standard security, lease or assignation will not be accepted for registration in the Land Register of Scotland.

Any future acquisitions will be similarly impacted. Without an ID number, an overseas entity will be prevented from acquiring new land or becoming a tenant under a long lease (including by way of assignation).

While separate provisions apply for England and Wales and Northern Ireland, the overall position is broadly similar.

Register of Persons Holding a Controlled Interest in Land

In addition to the UK-wide ROE, there is a separate transparency regime for land in Scotland. The Register of Persons Holding a Controlled Interest in Land (the “RCI”) was established on 1 April 2022 and is designed to show who has significant control over the owner of land (or tenant under a long lease) in Scotland. While overseas entities are currently within the scope of the RCI, it is hoped that, once the ROE is formally implemented, they will be expressly excluded to avoid double reporting.

Next steps

Companies House confirmed that they 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. They also plan to publish detailed guidance on GOV.UK after the secondary legislation is laid.

We will follow up with a comprehensive summary of any proposed secondary legislation once further information is published by Parliament or the UK Government.

Find out more: https://www.gov.uk/government/publications/economic-crime-transparency-and-enforcement-bill-2022-overarching-documents/factsheet-the-register-of-overseas-entities-web-accessible

f you are looking for advice on purchasing a property in the UK or are looking to source a property, do get in touch as we can help you buy, sell, lease or manage your portfolio.

We’re experts in both residential and commercial real estate, and will work with you personally to ensure your investments are worthwhile and serving your best interests. 

 Call us direct on + 44 (0) 207 993 4081 or simply send an email for a fast response.

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Stonelink International Media Team London
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