UK register of overseas owners of property to be implemented in August

Creation of the register of overseas entities is a key provision of the Economic Crime (Transparency & Enforcement) Act 2022 (the Act), enacted after the Russian invasion of Ukraine. It requires overseas entities that own or acquire property in the UK to register with Companies House, which has, according to ministers, been striving 'at pace' to get it ready as soon as possible. The commencement order for the register of overseas entities is now expected to be laid at the beginning of next month, says Companies House.

The Act prohibits any application being made to HM Land Registry to register an overseas entity as proprietor of land before the overseas entity has obtained an identifying code. HM Land Registry is warning that overseas entities due to acquire land soon should start preparing now to apply for an ID, as they will not be able to complete on or after 1 August 2022 unless they have registered on the register of overseas entities. Ultimately, the Act will prohibit overseas entities from transferring, leasing or charging their land unless they have obtained an ID. Existing landowners will be given six months to comply with the registration rules.

Some exceptions apply: anyone who successfully applies to register a transfer, lease or charge from an overseas entity that owned land when the Act commenced will not be prevented from registering the disposition by a restriction on disposition; if they make their application within the first six months of the Act taking effect.

Certain failures in relation to the register will be criminal offences, with consequent fines and even imprisonment. After registering, the name of the overseas entity and its beneficial owners will be publicly available.

There is an additional complication, introduced by the recent Register of Overseas Entities (Verification and Provision of Information) Regulations 2022, that a UK-supervised 'relevant person' must verify the required information before an overseas entity registers. These verification checks must be carried out by a UK-based agent that is supervised under the Money Laundering Regulations 2017, such as independent legal professionals or trust and company service providers. Companies House says it will be quicker and easier for the supervised agents to register on behalf of overseas entities and registration may take longer to process if done by the overseas entities themselves.

'Given these additional steps and the short deadline until the operational date, it is imperative that all those affected start to gather the relevant information now and factor any potential registration delays into acquisition timetables', commented law firm Taylor Wessing.

The Law Society has produced an interim note to alert those acting in property transactions involving overseas entities and will soon issue comprehensive guidance. ‘Verification for ROE purposes is not the same as the risk-based approach to client due diligence under the Money Laundering Regulations 2017 and is not the same as providing ID for lenders or for HM Land Registry', it notes. 'You should exercise extreme caution if you are considering providing such verification.'

Technical guidance is awaited from the government and HM Land Registry, but may not be available until after the introduction of the register of overseas entities on 1 August. Companies House will soon be writing to all overseas entities captured by the Act.

The Act applies to land bought since January 1999 in England and Wales, land bought since December 2014 in Scotland and land bought from the day the Act comes into force in Northern Ireland.

Sources

• Companies House
• HM Land Registry
• Law Society of England and Wales
• Taylor Wessing
• STEP UK News 3 March 2022: UK plans rapid implementation of Register of Overseas Entities legislation