UK register of overseas entities owning land – Action needed by overseas owners
Aimed at identifying anonymous foreign owners of UK land and combat economic crime, the Government is introducing a new Register of Overseas Entities owning land in the UK.
The Register will create a level play field with UK registered companies owning land, which already have to disclose their beneficial owners (“Persons with Significant Control”) to Companies House and will allow law enforcement to identify any UK property being used for anti-money laundering purposes.
The Register will be held with Companies House and it will be public.
The introduction of the Register, as part of the Economic Crime (Transparency and Enforcement) Act, has been fast tracked as a consequence of the Russian invasion of the Ukraine.
We set out below a summary of the main announcements but in the meantime please get in touch with Emily Tyrrell (our corporate services and trusts team’s manager) at email@example.com or with your usual Statura contact to check what steps you need to take at this stage and to fully understand the implications going forward.
Who needs to register?
The new provisions will apply to “foreign owners” of a “qualifying estate”, specifically:
- Any legal entity registered under the law of a foreign territory.
- Any person exercising significant influence or control over the entity by way of owning at least 25% of more of the shares or voting rights.
A “qualifying estate” means either a freehold or a leasehold estate in land situated in the UK, granted for a term of no less than seven years from the date of the grant.
How will it work in practice?
The Register will be held with Companies House and it will be public. The overseas entity will need to identify its “beneficial owners” (please see below) and provide their details (name, address, nationality, date of birth) to Companies House.
An ID number will be issued to the overseas entity and the information will have to be updated annually (through an “annual return” to be submitted within 14 days from the anniversary of registration), until such time as the owner successfully applies to have its information removed from the register.
Interestingly, the registration will apply retrospectively for land acquired on or before 1 January 1999. Also, if the owner disposes of the land after 28 February 2022, the requirement to register will still apply.
How can beneficial owners be identified?
Following the same model applied to the Persons with Significant Control Register for UK companies, a person (“A”) is a beneficial owner of an overseas entity if one or more of the following conditions are met:
- A holds, directly or indirectly, more than 25% of the shares in the company.
- A holds, directly or indirectly, more than 25% of the voting rights in the company.
- A holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company.
- A has the right to exercise, or actually exercises, significant influence or control over the company.
What will be the consequences for failing to register?
The registration will have to be proved when registering the title to land. From a practical point of view, if the entity is not registered, it will not be able to purchase land or to sell it.
Failure to comply will trigger hefty fines: £2,500 for each day on which the owner continues not to register the information. Non-registration is a criminal offence, punishable with up to 5 years’ imprisonment (in extreme circumstances, for example if false or misleading information are provided).
With the register expected to be implemented imminently, officers and professional advisors of overseas companies owning land in the UK should start considering their new obligations and how to identify who will be a registrable person in relation to the entity.
Please get in touch with Emily Tyrrell (our corporate services and trusts team’s manager) at firstname.lastname@example.org or with your usual contact at Statura to check what other steps you need to take at this stage and to fully understand the implications going forward.