From 1 August 2022 and by 31 January 2023, foreign entities wishing to buy, sell or transfer property or land in the UK will have to register with the Register of Overseas Entities at Companies House and identify their beneficial owners or managing directors. A beneficial owner is a person or entity that exercises significant influence or control over the foreign entity, usually by owning more than 25% of the company’s shares or voting rights, or the ability to appoint and remove directors.
Mandatory registration applies retrospectively to all foreign entities (governed by the law of a country or territory outside the UK) that:
- acquired property or land in England and Wales on or after 1 January 1999.
- acquired property or land in Scotland on or after 8 December 2014.
- acquired property or land in Northern Ireland on or after 1 August 2022.
- have disposed of property or land after 28 February 2022.
Such entities will be required to make an application for registration by paying a fee of £100 (refundable if the application is rejected).
Following registration, the information provided about the beneficiaries will be made public in the registry and the foreign entity will be issued a unique ID which they will have to provide to the Land Registry whenever they sell, purchase, transfer or lease property or land in the UK. Even if there is no change in ownership, foreign entities must annually update the registration with their details.
Failure to comply with the registration requirement is considered a criminal offence and will be punishable by fines of up to £2,500 per day or a prison sentence of up to five years. Owners who fail to register will also see their real estate or land property rights in the UK restricted. To facilitate the registration process, foreign entities will be able to rely on accountants based in the UK and regulated under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017.
These will need to apply for an assurance code from Companies House to confirm that they are authorised to complete verification checks on beneficiaries and then proceed to register the entity with the Register of Overseas Entities. Entities that cease to own land or property in the UK will then be able to apply to be removed from the register once the sections of The Economic Crime (Transparency and Enforcement) Act 2022 relating to updates and removal comes into force.
Maja Tamiazzo
Photo by Étienne Beauregard-Riverin on Unsplash
