On 5 April 2017 the UK government published its proposals for a register showing who owns and controls overseas legal entities that own UK property. The proposals also apply to overseas entities that participate in UK government procurement.
Views on the proposals are sought by 15 May 2017.
The proposals represent a further step in the UK government’s commitment to ensuring that the UK is an open and transparent place to do business, and reflect in part the concern that overseas people are investing the proceeds of crime or corruption in UK property.
Overseas entities owning or proposing to acquire property in the UK would have to provide information about their ultimate beneficial owners to Companies House and apply for a registration number. In the case of overseas entities already owning UK property, they would have 12 months to comply.
The information to be provided is expected to be the same as that to be provided in the register of people with significant control over UK companies (PSC register), which UK companies are required to maintain. This is in respect of peoplewho directly or indirectly hold more than 25% of the shares or voting rights in the company. Or have the power to appoint or remove a majority of the board of directors of the company, or otherwise have the right to exercise or actually exercise, including through an intermediary, significant influence or control over the company. The details for UK companies have to be publicly filed at Companies House.
Under the proposals, a new register for overseas entities will be held at Companies House, so that the information is publicly accessible.
A restriction will appear on the title maintained at the Land Registry prohibiting a sale, long lease or legal charge of the property, if the overseas owner has not complied fully with the overseas register requirement. Information on the overseas register will have to be updated at least every two years and it will potentially be a criminal offence to fail to maintain the register or to update it.
It is proposed that the registration requirement will apply to freehold properties and in respect of leases that require registration and have an initial term of at least 21 years. It is, however, anticipated that it will be possible for legitimate lenders to enforce security over property in cases where an overseas entity is in breach of the registration requirements.
For further information on this issue, please speak to your usual contact, get in touch with Nick Williams, or if you have any questions in relation to UK property, please contact: