You might be wondering what the laws are around foreign entities owning property or land, especially with Brexit. With the amount of foreign investment in the UK, there’s certain laws and regulations surrounding owning property or land. The regulation which determines this is called the Register of Overseas Entities.
Foreign, or overseas, entities include companies, partnerships or legal bodies governed by law or territory outside of the UK. It does not include an individual or a non-UK trust.
Companies House have recently announced a revision of the law surrounding foreign entities owning property or land through the through the new Economic Crime (Transparency and Enforcement) Act 2022, as of 1st August 2022. We break down the exact details of the new Register of Overseas Entities, what it means for foreign owners of property or land in the UK, and how to apply to Companies House to declare the information needed…
What Is The New Register Of Overseas Entities?
The new public register at Companies House was launched on the 1st August 2022. Overseas entities who want to buy, sell or transfer property or land in the UK, must register with Companies House. They also need to declare who their registrable beneficial owners or managing officers are.
Overseas entities who already own or lease land or property in the UK will also need to register with Companies House and tell HMRC who their registrable beneficial owners or managing officers are by 31st January 2023.
This applies to overseas entities who bought property or land on or after:
- 1st January 1999 in England and Wales
- 8th December 2014 in Scotland
Entities that disposed of property or land after 28th February 2022 will also need to give details of those dispositions.
Further guidance from Companies House and HM Land Registry can be found here.
What Is A Qualifying Estate?
A qualifying estate is deemed as either:
- A freehold estate (an estate in land which provides the holder of the estate with rights of ownership)
- A leasehold estate (An estate in land which provides the holder of the estate with rights of possession and use of the land but not ownership) of land granted for a term of more than 7 years.
How To Apply To Companies House?
The overseas entity will need to provide certain information to Companies House. This is about the overseas entity and the beneficial owners who must be registered. The Act specifies what information must be provided to Companies House and details of who is a beneficial owner.
The information regarding the beneficial owners must be verified by a third party. This could be from an external accountant like Nordens, or an independent legal professional. They must be regulated under the money laundering regulations.
The application must also contain a number of statements (set out in the Act) that the overseas entity must make. This is in order to identify its registrable beneficial owners. The overseas entity will also need to provide information about any relevant dispositions (transfer, grant of a legal charge or grant of a lease for more than 7 years), since the 28th February 2022 and the end of the transitional period, being 31st July 2023.
They must also provide information as to who the registrable beneficial owners were immediately before the relevant disposition was made. Once registered, the overseas entity will receive a new overseas entity ID number.
Those overseas entities purchasing a qualifying estate in the UK will need to be registered on the register. This is from the time they apply for registration at HM Land Registry, otherwise their application may be cancelled.
They will need to add their overseas entity ID number as part of their application to HM Land Registry. This will come into effect from the 5th September 2022.
What To Do If You’re An Unregistered Overseas Entity?
To avoid parties entering into a quick sale prior to the Act coming into force, certain unregistered overseas entities need to provide information to Companies House about any relevant dispositions (transfer, grant of a legal charge, or grant of a lease for more than 7 years), since the 28th February 2022 and the end of the transitional period, being 31st July 2023.
They must also provide information as to who the registrable beneficial owners were immediately before the relevant disposition was made.
Once registered, the overseas entity must update the information on the register annually. Failure to do so will be a criminal offence.
HM Land Registry will now automatically place restrictions on the titles of registered qualifying estates owned by overseas entities. For certain dispositions (transferring the title, granting a charge, or the grant of a lease for a term of more than 7 years), the overseas entity will either need to be registered on the register for overseas entities, exempt from registration, or an exception must apply, in order to comply with the restriction.
We hope this has outlined to you the changes in law for the new Register of Overseas Entities. If you’d like to know any further information on registering as an overseas entity, or anything accounting related for that matter, please do not hesitate to get in contact with us at Nordens, where one of our trusted advisors would be happy to talk you through your query.