The countdown is on for overseas owners of property in the UK to comply with the tightened register regime following the government's clampdown on economic crime
Following the passing of the Economic Crime (Transparency and Enforcement) Act 2022 (the Act) in March of this year, the Companies House register of overseas entities became live on 1 August 2022. Here is what you need to know:
- Overseas entities already owning property in the UK will face criminal sanctions if they do not apply to Companies House with details of their ownership structure, including the details of their registrable beneficial owners, by 31 January 2023. Following the implementation of updated land registration provisions on 5 September 2022, the Land Registry has started placing restrictions on the titles of freehold and leasehold estates owned by overseas entities. If the overseas entity was registered as the owner of the property before 1 August 2022 the restriction will prevent them from dealing with the property after 1 February 2023 unless they are registered at Companies House by that date. If the overseas entity is registered as the owner of property after 1 August 2022 then the restriction will prevent dealing immediately after the point at which it is entered onto the relevant title by the Land Registry.
- An overseas entity seeking to purchase, lease or grant security over UK property from now on will need to have registered at Companies House before completing its acquisition or financing. The timing of the application for registration will need to be prioritised in order to ensure it does not delay completion of the transaction. Current turnaround time for registration at Companies House is approximately 24 hours, although we understand the number of applications submitted to date is relatively low.
An additional hurdle in the registration process is the need for the information submitted as part of an overseas entity's application to register at Companies House to be verified by a "relevant person." Verification by someone such as a lawyer, accountant or regulated company service provider is required:
- upon initial registration of the overseas entity;
- before each required annual update to Companies House; and
- before any application to remove an overseas entity from the register can be made.
Verification entails obtaining documents or information from a reliable source independent of the person being verified Following guidance from the Law Society, the majority of English-regulated law firms are not undertaking the verification role for overseas entities, but a number of company secretarial providers have stepped in to fulfil this role and capitalise on an emerging market in this area.
A second Economic Crime Bill is expected shortly in order to iron out some of the issues caused by the hurried drafting and implementation of the Act but at present, interested parties have enough to grapple with in terms of complying with their verification and registration obligations. For further detail on the regime, please see our detailed briefing here.