New register of beneficial owners of overseas entities owning UK property

Last week the UK Government published the Economic Crime (Transparency and Enforcement) Bill, reintroducing its long-stalled proposals to create a new register of beneficial owners of overseas entities owning UK property.

The Bill has been fast-tracked as a consequence of the Russian invasion of Ukraine and is expected to come into force later this month.

Once enacted we will be providing a fuller review of how this important new legislation may affect existing and future ownerships/leases of UK real estate with particular focus on commercial real estate. For now, we will focus on the headline provisions based on the information available to us.

Briefly:

1. the new registration requirements and connected restrictions on land transactions will apply to all overseas entities who own, sell, buy or grant security over UK real estate (including leases of more than 7 years): importantly, they will introduce a retrospective registration requirement for all overseas entities who already own UK property, having acquired it on or since 1 January 1999 in England and Wales and since December 2014 in Scotland - such entities will have a transitional period of 6 months within which to register their beneficial owners;
2. who is registrable will be modelled on the "'Persons with Significant Control" regime which already applies to UK companies.
3. the new rules will apply to all transactions involving the acquisition or disposal of UK property where either the buyer or seller is an overseas entity (defined broadly as a “legal entity governed by the law of a country or territory outside the United Kingdom” and includes a body corporate, partnership or other entity that is a legal person under the law by which it is governed, as well as foreign governments and public authorities): currently we believe this would also include foreign-domiciled funds (e.g. superannuation funds) and we are clarifying the position relating to offshore trusts holding UK land (including JPUTs) where there is still some uncertainty. 
4. the register will be held by UK Companies House, with support from the UK’s Land Registries. Different information is required to be disclosed depending on whether the beneficial owner is an individual, a government or other public authority or any other legal entity. In addition to the name, address and date on which the beneficial owner became registrable, there is also a requirement to state which of the various “registrable beneficial owner” criteria have been satisfied. As the register will be open to the public, information about individuals e.g. date of birth and residential address will not be available for inspection.
5. Land Registry restrictions will be placed on all titles registered in the name of overseas entities, and any such entities who do not declare their beneficial ownership will face restrictions on sale of their UK property. Conversely an overseas entity acquiring UK property will not be able to be registered as proprietor at the Land Registry unless it appears on the new register at Companies House.
6. failure to comply with the rules will be a criminal offence punishable by fines and up to 5 years’ imprisonment. The draft Bill contains carve outs for enforcement of security.

We will prepare a fuller briefing just as soon as we are able: in the meantime, please feel free to get in touch with your usual Linklaters Real Estate contact for further advice and to discuss how the proposals may impact you or your organisation specifically.