Blandy & Blandy’s Saudah Basa explains the new Register of Overseas Entities
Saudah Basa, of Thames Valley law firm Blandy & Blandy’s commercial property team, has explained the newly introduced Register of Overseas Entities legislation.
What does it mean?
On 1 August, the Register of Overseas Entities launched under the new Economic Crime (Transparency & Enforcement) Act 2022. It aims to make the beneficial owners of land and property in the UK more visible, and may prevent sales, purchases, leases or charges until the entity is registered at Companies House.
It means that an overseas legal entity, such as a company or other organisation based outside the UK (including Ireland and the Channel Islands), which holds or wishes to acquire UK property (both freehold and leasehold) must register with Companies House and provide details of its beneficial owners and managing officers.
If an overseas entity already holds property, and was registered as the proprietor between 1 January 1999 and 1 August 2022, they are required to register with Companies House within six months of 1 August 2022.
The same rules apply to those overseas entities looking to sell, lease, transfer or charge a UK property from 28 February 2022 (intentionally backdated), they will likewise need to register with Companies House before being able to do so – unless they were registered before 1 January 1999.
Similarly, overseas entities looking to purchase or lease (for more than seven years) property within the UK will be unable to register said property with the Land Registry after 5 September 2022, unless they’re registered with Companies House.
The Register will be made public, and the registered entities will receive an overseas entity ID from Companies House. They will be required annually to ensure that all information on the Register is up to date.
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Verification
Before an overseas entity can register their beneficial owners or managing officers at Companies House, they will need to have certain, very detailed information verified by a “relevant person” as stated in the ECTE Act.
A UK based agent supervised under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017, must carry out the verification checks. If misleading or false information is submitted to Companies House, then the verifier could be liable to criminal charges.
Failure to comply
Failure to comply with the registration could mean that the overseas entity and their officers are committing a criminal offence. If the entity enters into a property transaction in breach of these restrictions, a fine of up to £2,500 per day and/or imprisonment of up to five years will be imposed.
From 5 September 2022 the Land Registry will register a restriction on the title that will prevent the entity from registering a sale, lease, or charge of the property. The restrictions will come into effect on 1 January 2023. Failure to comply will severely delay or even prevent transactions taking place.
Next steps
Overseas Entities and managing officers with current or envisaged UK property transactions taking place should prioritise registration.
It is thought that not many organisations will offer the verification service because of the risks involved. This could also delay the registration process which, in turn, could jeopardise the whole transaction.
Purchasers/tenants should check the status of the seller/landlord early in a transaction to ensure they are given the relevant information to enable them to register their transaction.
More information can be found here.
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