The Government has published draft legislation to introduce a register of beneficial ownership of overseas entities that own real property in the UK or participate in UK government procurement.
The draft bill follows the Government's response in March this year to the call for evidence issued in April 2017. The Government intends the register to be operational in 2021.
The Government's aim is to have the policy apply consistently across the UK, subject to the differences in land registration. This briefing focuses on the proposals as they affect real property in England and Wales.
- Overseas entities that already own UK property will have a grace period of 18 months to provide information for the register
- The information on the register will need to be updated every 12 months
- Failing to provide the required information will be an offence, as will providing false or misleading information
- An overseas entity which does not comply with the requirements will not be able to register its property at the Land Registry
- Where an overseas entity's title to property is registered, failure to comply will also affect its ability to sell, mortgage, or grant a lease for a term of more than seven years. Compliance will be enforced by restrictions to be entered against the title at the Land Registry, and by criminal sanctions. (If an overseas entity enters into any of these types of transaction at a time when it is non-compliant, it and its officers will commit an offence.)
Implications for UK companies and individuals
As well as increasing the administration burden on overseas entities, the new registration requirements will affect other parties. Any person or UK company entering into a property transaction with an overseas entity will need to check that the entity is registered at the outset and that the registration is up to date when the transaction completes.
Individuals or UK companies who co-own property with an overseas entity are potentially exposed, because the ability to sell, lease or charge the asset will depend on the overseas entity continuing to comply with the registration requirements. Co-owners could request contractual obligations from the overseas entity to keep the registration up to date, but this is not a perfect solution.
With the draft bill, the Government has issued a set of further questions on some aspects of it (for instance whether certain types of overseas entity should be exempt from the requirements). Responses are due by 17 September.
As ever, the devil is in the detail and the impact of the proposed register may not be clear until the legislation is finalised and the register is operational. Watch this space.