New rules for overseas owners of UK real estate under The Economic Crime (Transparency and Enforcement) Act

The Economic Crime (Transparency and Enforcement) Act received Royal Assent on 15 March 2022, following an expedited passage through Parliament prompted by Russia’s invasion of Ukraine.

While its progress has been accelerated due to the government’s strategy to intensify sanctions, the intention to introduce a public register of overseas entities which are beneficial owners of UK real estate has been on the cards for some time.

The Government news release outlined how: ‘A new Register of Overseas Entities, requiring those behind foreign companies which own UK property to reveal their identities, will also be created under the act. Entities who refuse to reveal their ‘beneficial owner’ will face tough restrictions on selling the property and those who break the rules could face a fine of up to £2,500 per day or up to 5 years in prison.’

Companies House has begun work to implement the register as quickly as possible, working closely with the UK’s three land registries to develop the reporting infrastructure. The intention is that after compliance with the registration requirements the Company will received a designated ID number and without that it will not be able to register or transact.

While the precise date of practical implementation is not yet known, the rules already affect any foreign company which has sold property since 28 February 2022, and they will be required to submit their details. There will also be a retrospective reporting requirement on overseas entities which applied to become the registered proprietor of relevant real estate in England or Wales on or after 1 January 1999.

The Overseas Entities Register, which will be available for public viewing, will require information about:

  • the overseas entity;
  • the beneficial owners – whether individuals, legal entities, public authorities, or governments;
  • managing officers.

Further guidance is expected in regard to the details which will need to be registered.

Business Secretary Kwasi Kwarteng commented that: ‘Our new Register of Overseas Entities, the first of its kind in the world, will have an immediate dissuasive effect on oligarchs attempting to hide their ill-gotten gains, ensuring that the UK is a place for legitimate business only.’

How we can help real estate owners and investors

If your real estate structure that you are dealing with involves any ownership by an overseas entity, then you will be affected by this new legislation and will need to incorporate the reporting requirements into your action plans, particularly in regard to property acquisitions and disposals. Failure to comply will mean that the entity cannot be registered at land registry and cannot make disposals and so will also affect lenders and financing arrangements.

We will be following the progress of the Overseas Entities Register closely and suggest that you get in touch as soon as possible.  We will then keep you informed of developments and can support you through the registration process when required.

Contact Paul Sheeter in our commercial property team on 020 7845 7417  or email Ingram Winter Green has offices in John Street, London WC1N.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.