Register of Overseas Entities owning UK land
Foreign investment in UK property continues to be a political hot topic, this time catalysed by the war in Ukraine. Legislation was rushed through Parliament in March 2022 to introduce the Register of Overseas Entities owning UK land (ROE). The new measures are intended to increase transparency.
The effect is wide ranging; if you own UK land (including residential or commercial properties) through overseas entities, such as companies and trusts, you should seek advice as soon as possible. You will need to check and understand the registration requirements, paying particular attention to who is considered a beneficial owner and the retrospective effect of the measures. Failure to comply with the registration requirements has severe penalties.
What is the ROE?
It is a new register, that will list details of the beneficial owners of all overseas entities that own UK property (residential or commercial). The register will be publicly accessible at Companies House.
How will it work?
You will be required to register the details of the beneficial owners of the overseas entity owning the UK property. Once registered, an ID number will be provided. This will be required to register dispositions at the Land Registry. Without it, in effect, the entity will not be able to register, buy, sell or mortgage the property.
You are required to update the information annually and when there are any changes.
The registration requirement applies to overseas entities purchasing UK property going forward.
The measures have retrospective effect; overseas entities that acquired UK property after 1 January 1999 will need to register as well.
It is also important to note that property sales by overseas entities since 28 February 2022 will need to be registered.
You will have 6 months from the date the legislation comes into force to comply with the registration requirements. It has not come into force as we are waiting for Companies House and the UK Land Registries to put in place the register. There is political pressure to get the register up and running as soon as possible and we are told work is continuing “at pace”.
What is an overseas entity?
A legal entity that is governed by the law of a country or territory outside the UK (note that this includes entities formed in the Channel Islands and the Isle of Man). A legal entity includes companies, LLPs, foreign foundations and non-UK partnerships with legal personality.
Non-UK trusts are not ‘overseas entities’ but will need to provide some information.
Who is a beneficial owner?
The definition is wide. It includes people who hold directly or indirectly more than 25% of the shares or more than 25% of the voting rights.
However, it can be wider than this and careful consideration needs to be given. It can also capture anyone who has the right to exercise, or actually exercises, significant influence or control over the overseas entity.
Will the register be public?
Yes. Information about the entity and beneficial owners will be publicly available on the Companies House website. This includes, names, date of birth and form of the legal entity.
Where the beneficial owner is a trustee, information about the trust, settlor, beneficiaries and other interested persons is required. However, this will not be available for public inspection.
What if you do not comply?
Failure to register, submitting false information and transferring land in breach of the registration requirements is a criminal offence for the entity and officers.
Penalties include fines of up to £2,500 a day or a 5 year prison sentence.
As mentioned, if you do not have an ID number, the overseas entity will be prevented from buying, selling or effectively dealing with property in the future.
It is important to review UK property structures, including disposals since 28 February 2022, and seek advice to understand the registration requirements.
If you would like more information, get in touch with Hilesh Chavda