Among other measures, the Act launches the long-anticipated public register of UK property-owning overseas entities and their beneficial owners (the Register). The Register will be held and maintained by Companies House, with anyone able to inspect and obtain copies (although certain personal information, e.g., residential addresses, will not be available for public inspection).
In light of its accelerated passage through Parliament, the date of implementation of the Act remains uncertain; however, some of the more material provisions of the new regime for overseas UK property investors will be the following:
- The Register will record the beneficial ownership of all non-UK registered companies owning a registered land interest in the UK. This will include providing information on common property-holding overseas corporate structures, such as those based in the Channel Islands.
- There will be annual updating duties on all affected entities, and the requirement to register will apply retroactively to ‘Qualifying Estates’ (being all currently owned registered freehold interests, leasehold interests that concern leases granted for more than seven years, and registered legal charges) acquired since January 1999.
- Failure to comply with the registration and updating obligations will be a criminal offence, and may attract financial penalties under the Act and even custodial sentences for directors of non-compliant overseas entities.
- A transitional period for the first six months post-enactment will allow relevant overseas entities time to register their interests. Any relevant dispositions made since 28 February 2022 will be caught, even where the relevant overseas entity no longer owns the relevant interest.
- On the registration of an overseas entity, Companies House will allocate an overseas entity ID to the entity and record this in the Register. Without an overseas entity ID, an overseas entity cannot be registered at HM Land Registry as the owner of any UK land it acquires.
- Restrictions will be included by HM Land Registry in the title register for qualifying property, preventing the registration of any disposition without appropriate evidence that the entity is in compliance with the Act or is excluded. The Act sets out certain exemptions to the registration requirements; however, these are currently limited to matters of national security, and where to do so is in the interests of detecting serious crime.
- Notably, any lenders seeking to take security over affected property interests will need to be satisfied that the Act has been complied with to ensure their security is registered at HM Land Registry.
At the time of writing, much of the Act (including its date of implementation and the precise details of the required information for the purposes of registration) remains subject to enabling regulations to be published by the government in due course. Sidley will be publishing more detailed guidance as the situation develops.