In a key development for property investors, the Government has published a Bill establishing a public register of overseas entities (including companies and partnerships) which own property in the UK.
The Registration of Overseas Entities Bill (“the Bill”) has been presented as an innovative and far-reaching initiative
to combat corruption. In doing so, it introduces significantly more onerous filing requirements for non-UK entities owning interests in UK property (whether residential or commercial) and has the potential to be a trap for the unwary.
Most overseas legal entities that hold property will be required to register and, therefore, provide details which will be publicly available. Substantive trusts, however, are excluded from the scope of the new register. HMRC has already established a separate Trust Registration Service, which operates as a non-public register.
When do overseas entities register?
Overseas entities will be required to register with Companies House prior to acquiring certain property interests or, where they already hold property, within a period of 18 months from when the Bill is passed into law. Whilst the Bill could be enacted within a short timeframe, the Government has announced that it expects the register to be operational by 2021.
Whilst we expect to see a publicity campaign informing existing owners of these new requirements, news of the changes may well not reach many investors, who perceive UK property as a ‘hands-off’ investment not requiring regular professional advice. Furthermore, the register information must be updated at least annually, and so additional ongoing compliance costs will need to be incurred.
The requirement to register will apply to entities holding leasehold (of more than seven years), as well as freehold, interests in land where title would require registration at HM Land Registry. The new registration system is linked to land registration and
any transfers of title, in order to provide incentives for compliance and capture future transactions.