Owners of UK real estate via non-UK entity – beware of new legislation
If you own UK real estate via a non-UK entity or are considering investing in UK real estate, you need to know the new legislation. Non-UK entities owning UK real estate will be required to lodge information about their beneficial owners on a new register called the register of overseas entities. The register is managed by Companies House and is publicly available.
Part of the new Economic Crime (Transparency and Enforcement) Act 2022 brought in in March, the register aims to increase transparency in the economy by removing the veil of secrecy that investing through a non-UK entity provides. Many people have legitimate and reasonable reasons for using non-UK entities to own UK real estate, so it will be interesting to see what exemptions and criteria the final legislation contains.
Only primary legislation has been enacted thus far and secondary legislation is still required. We expect the launch date of the new register to be confirmed later in 2022. However, we do know that entities already owning UK real estate will be given six months from the launch date to register. Any relevant new purchases after the launch date will require immediate lodging on the register. It is expected that Companies House will in due course contact those non-UK entities that this new legislation applies to.
We expect the register to operate in a similar fashion to the persons of significant control (PSC) system. This means only beneficial owners with a significant ownership (25% or more in the case of the PSC system) would need be named. Additionally, the register will be backdated to record property bought by non-UK entities up to 20 years ago in England and Wales, as well as any properties sold between 28 February 2022 and the register’s implementation. Companies House will have the power to challenge information submitted.
If you would like to discuss the potential impact this may have on your real estate investments, please get in touch with our real estate team.
For more information on the new register, please see the following links:
Progress on the Register of Overseas Entities
Government takes landmark steps to further clamp down on dirty money