Register of Overseas Entities
The Economic Crime (Transparency and Enforcement) Act 2022 (‘ECTEA’) has been passed in response to concerns about the lack of transparency in respect of ownership of UK property by overseas entitles and the use of overseas entities to launder money in the UK.
The provisions of the ECTEA create requirements for registration at Companies House and transactions at the Land Registry. This note gives a brief outline of some of the provisions and is not a comprehensive overview of the obligations imposed on overseas entitles or the actions which they must take to comply. If you require further advice or information, please contact Stephen Jarvis in our corporate team or Samantha East in our real estate team.
The Register of Overseas Entities
The Register of Overseas Entities (‘ROE’) came into force on 1 August 2022. Any overseas entity that owns land or property in the UK must declare their beneficial owners and/or managing officers. If they do not comply those entities will be restricted from buying, selling, transferring, leasing or charging their property in the UK. Non-compliance also carries criminal sanctions – fines up to £2,500 per day and/or a prison sentence of up to 5 years.
An overseas entity is a legal entity that has a legal personality and is governed by the law of a country or territory outside the UK. It includes companies, partnerships and other organisations including those companies incorporated in the Channel Islands, the Isle of Man and the Republic of Ireland.
The requirements affect not only new purchasers or tenants of land but also any purchase of property or land on or after 1 January 1999 in England and Wales (other dates apply to Scotland and Northern Ireland). This stipulation means that every overseas entity owning property purchased since 1 January 1999 must register on the ROE by 31 January 2023.
Any overseas entity that disposed of property or land after 28 February 2022 must provide companies House with details of those dispositions.
The Government has provided guidance on the Register and the information that must be submitted in order to obtain an Overseas Entity ID (‘OE ID’).
HM Land Registry
On or after 5 September 2022 the Land Registry will not register an overseas entity of a qualifying estate (a freehold or lease of more than seven years) unless that entity has obtained an OE ID.
There is a transitional period beginning on 1 August 2022 and ending on 31 January 2023 during which overseas entities may dispose of their property without an OE ID. Details of the disposition and beneficial ownership must nevertheless be provided to Companies House.
The Land Registry will register restrictions on the titles of any properties held by overseas entities which prevent registration of applications and dispositions without an OE ID (subject to the transitional provisions).
For properties being disposed of during the transitional period, the restriction will allow dispositions to be registered without an OE ID for the disposing entity (provided the details of the disposition and beneficial ownership are provided to Companies House).
For all overseas entities applying to be registered as proprietor on or after 1 August 2022 and all dispositions after 31 January 2023 the restrictions will require a valid OE ID. The following types of applications and dispositions are affected:
- Transfers of a qualifying estate to an overseas entity
- Transfers of a qualifying estate by an overseas entity
- Registrable leases for a term of more than seven years to an overseas entity, are granted out of a qualifying estate
- Registrable leases for a term of more than seven years by an overseas entity granted out of a qualifying estate
- Registrable charges by an overseas entity
- Applications for first registration of a qualifying estate where the applicant is an overseas entity
- Adverse possession applications to register an overseas entity as proprietor of a qualifying estate.
This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. Greenwoods Legal LLP is a Limited Liability Partnership, registered in England, registered number OC306912. Our registered office is Queens House, 55-56 Lincoln’s Inn Fields, London, WC2A 3LJ. A list of the members’ names is available for inspection at our offices in Peterborough, Cambridge and London. Authorised and regulated by the Solicitors Regulation Authority, SRA number 401162. Details of the Solicitors’ Codes of Conduct can be found at www.sra.org.uk. All instructions accepted by Greenwoods Legal LLP are subject to our current Terms of Business. VAT Reg No: 161 9287 89.