The transparency of offshore holding structures for UK property has been on the government’s radar for some time but it was the Russia-Ukraine crisis that accelerated plans to introduce a public register of overseas entities (“ROE“) holding UK property. The principle aim of the ROE is to make it more difficult for foreign criminals to launder money through UK property and follows a similar theme to the UK Trust Register introduced in 2017 to make trusts more transparent to government authorities. It is good to be aware of these rules if you are buying a property from an overseas entity as any non-compliance is likely to hold up the purchase and remedial action should be prompted at an early stage.
The ROE was introduced via the Economic Crime (Transparency and Enforcement) Act 2022 and came into force on 1 August 2022. Foreign owners of UK property who hold their interest via an overseas company or other entity will now have to reveal their identity. Previously, if an overseas company was used to hold a UK property, the company’s name would be on the Land Registry title and the ultimate beneficial owners of that company (or any offshore companies or trusts above it) would not need to be disclosed.
As from 1 August 2022, overseas entities holding UK property that was acquired on or after 1 January 1999 (for England and Wales) or on or after 8 December 2014 (for Scotland) must register on the ROE before 31 January 2023. As from 5 September 2022, the overseas entity will not be able to register their title with the relevant UK Land Registry without registering on the ROE first. Registration is done via Companies House and, unlike the UK Trust Register, is an online register that is accessible to the public. The overseas entity must disclose information on itself and its beneficial owners.
Failing to register can lead to criminal penalties and the overseas entity will be restricted from buying, selling, transferring, leasing or charging the UK property concerned.
Offshore trusts can be affected by the ROE in some circumstances and any obligation to register on the ROE is in addition to any obligation to register on the UK’s Trust Register.
Wedlake Bell can advise clients on compliance with the ROE regime and any related UK Trust Register responsibilities.