When it comes to buying, selling, and leasing property in the UK, strict new requirements affect matters involving overseas entities – Coodes’ Partner Jo Morgan looks at what this involves.
With the introduction of a new register of overseas entities (ROE) from August this year, overseas companies now face new requirements when it comes to owning property.
Although we are currently in a transitional stage for pre-existing property ownership, overseas entities must now register with Companies House if they want to buy, sell, or lease property for over seven years in the UK and before it can make an application to the Land Registry to register the new acquisition in law.
From 1 August 2022, overseas companies owning property in the UK must register on the ROE and disclose the details of their beneficial owners to Companies House, alongside providing other information, before they are issued with an overseas entity registration number.
Overseas entities caught by the new requirement are non-UK incorporated companies and partnerships being governed by the laws of a country outside the UK.
The new requirements will also apply to those overseas entities who already own UK property which was purchased on or after 1 January 1999 and the disclosures must be provided to Companies House in the same way by 31 January 2023.
In the application for registration to Companies House, overseas entities must include details of whether they have made a relevant disposition of the land since 28 February this year. This will apply to any property which is a qualifying estate, meaning any freehold or a lease for more than seven years.
How is this affecting property transactions?
It is important to understand that these new measures not only affect overseas entities disposing of property, but also those clients purchasing or acquiring registerable leases from overseas entities.
We always recommend that you seek professional legal advice before making any decisions, whether buying, selling, or leasing property because failing to review these provisions carefully can have serious consequences.
Not being alert to the obligations can result in not being able to register a property transaction at the Land Registry and not complying with the register can include hefty fines of £2,500 per day, prison sentences and restrictions on dispositions.
What action do I need to take?
As we explained earlier, overseas entities wishing to purchase UK property from 1 August 2022 must register in advance with Companies House. They will then be provided with an Overseas Entity ID number which will allow the business to sell, lease or charge the property.
To register, a UK regulated ROE verifier approved by Companies House and holding an agent assurance code will need to be appointed. These procedures must be followed, and the information accepted before an overseas entity registration number (OEID) can then be issued.
After 5 September 2022, any new purchases of land in the UK must have this ID number to register their legal title at the Land Registry.
Your legal adviser will need to consider any preliminary steps that need to be taken in dealing with property matters to make sure this is achieved. This can include early enquiries and a contract obligation to ensure the ROE registration requirements are met.
Tackling money laundering and tax evasion
With the newly introduced Economic Crime (Transparency and Enforcement) Act 2022, the UK government has put these further measures in place in a bid to tackle money laundering and tax evasion.
The aim of the new requirements for overseas companies and the use of the register is to increase transparency in corporate structures and eliminate anonymity, like the measures being introduced for company registrations.
The Department for Business, Energy and Industrial Strategy, Companies House and Land Registry have all published their own further guidance on how to comply with the register of overseas entities.
For more advice
It is advisable that all professionals involved in dealing with property transactions and overseas entities are aware of these new requirements. By dealing with the potential issues at an early stage, clients can take the right steps to comply and ensure that transactions are not delayed as a result.
Our dedicated commercial property team can give more advice on this subject and can provide full details of the new requirements. To get in touch, send us an email or call us on 0800 328 3282.