It isn’t often that we need to adapt to change in the commercial property legal sector! Whilst there is the occasional stamp duty amendment from time to time, generally we’re always working on the basis of historic legislation such as Landlord and Tenant Act 1954 or Land Registration Act 2002.
There is however a change on the horizon as a result of the introduction of the register of overseas entities. The Register of Overseas Entities came into force in the UK on 1 August 2022 as a result of the new Economic Crime (Transparency and Enforcement) Act 2022 (“the Act”).
The aim of the Register is to ensure that Companies House holds records of overseas entities including a list of such entity’s beneficial owners and/or managing officers. The primary aim of the legislation itself is to allow law enforcement to have more readily accessible information on overseas entities and fraudsters or money launders who may be using UK based property as a vehicle for money laundering.
It is imperative that overseas entities with an interest in property in the UK register with Companies House and confirm their beneficial owner or managing officers no later than 31 January 2023. An interest in land includes owning freehold land but also holding a lease for a term of more than 7 years.
Once an overseas entity has registered with Companies House it will receive a unique Overseas Entity ID which must be produced to the Land Registry in the event that the company buys, sells, transfers, lease or charges land in the UK.
A failure to comply with the Act can result in a fine of up to £500 per day or a prison sentence of up to 5 years. In addition, if an overseas entity owns property and wishes to dispose of it but hasn’t registered, it is likely that it will be prohibited from doing so pursuant to a restriction being entered on its title preventing it from disposing until such time as it has registered.
Whilst readers of this update may not themselves be overseas entities, it is important to be alive to the registration requirement particularly if an individual or entity becomes involved in a transaction with an overseas entity. The requirement to register could result in delays with a transaction or in some instances prevent the transaction from proceeding at all.
If you would like to speak to someone in our Commercial Property Team about this, then please contact us on 01642 356500/0191 2322574.
