The Government has been exploring proposals to create a register of overseas companies and other legal entities owning property in the UK, including their beneficial owners. This has important implications for overseas property investors. This short article will brief investors on what they need to know about the new proposals.
1. Why is this being introduced?
The proposals are intended to bring transparency requirements for overseas entities in line with the requirements for owners based in the UK, which the National Crime Agency hopes will deter money laundering.
2. Am I required to register?
Overseas entities (‘entities’) owning either the freehold of, or a lease of over 21 years, on UK properties would be required to register. Entities proposing to purchase UK property will be required to register beforehand.
Additionally, entities which already own UK property will have one year to register or they will be prevented from selling the property or creating a long lease or legal charge over it. Entities may be exempt from registration where equivalent disclosure requirements exist in their home country.
3. What will registration entail?
The proposed register would be held at Companies House and it is expected that a fee will be charged for registration. Entities will be required to submit the following information to the register and update it every 2 years:
Information about their beneficial owner(s), equivalent to the requirements of the existing ‘PSC’ regime. This information must be confirmed with the beneficial owner(s) before submission to the register. An entity must take reasonable steps to identify its beneficial owners but, where they cannot be identified, the entity cannot provide information on them or there are no beneficial owners by the definition in the PSC regime, entities can instead provide information about their managing officers.
Information about the entity itself, including its name, legal form, contact details and office address.
4. What are the penalties if I don’t register?
As well as the restrictions placed on unregistered property set out in 2, the government proposes making it an offence for entities to:
Own property at the end of the 12 month period without complying with the regime
Fail to keep registration information up to date
Provide false or misleading information to the register