World-first UK Beneficial Ownership Register

The government has recently announced that a register of overseas beneficial ownership of UK property will be launched in 2021, to protect the integrity and reputation of the UK property market. This register will be the first of its kind in the world and will require overseas companies that own or buy property in the UK to provide details of their ultimate owners (broadly speaking, individuals who hold more than 25% of the shares or voting rights, or otherwise exercise significant influence or control).

The UK has already taken major steps to increase corporate transparency, with the introduction of the “people with significant control” (PSC) register; a public register of those who control UK companies. Now UK property is being brought into play in the battle against money laundering. It is hoped that the register will minimise opportunity for criminals to use anonymous shell companies to launder criminal proceeds via UK properties, and will make it easier for law enforcement agencies to track illegal funds.

The new register will apply to both existing and future property ownership and to freehold and leasehold properties of more than 21 years. Overseas entities will not be able to buy, sell, charge or grant a long lease of UK property unless they are registered. Overseas entities that already own UK property will be given a year to register their beneficial ownership details, or to sell if they do not want to do so. At the end of the year, any such entities will be prevented from selling their property or from creating a long lease or charge if they have not registered, and a restriction will be put on the title accordingly.

The new register will be held by Companies House. Once registered, overseas entities will be given a registration number. The Land Registry will not register the title of an overseas company without a valid registration number. Anyone will be able to check the register free of charge.

The government has committed to publishing a draft bill this summer and to introduce it in Parliament by next summer.

This will be a significant factor to bear in mind when entering into a transaction with an overseas company, so that the registration process does not end up causing delay, or preventing a sale from being registered. Evidence of registration will therefore need to be sought early on, and before exchange of contracts.

Fenella Eddell is a solicitor in the property department at Barker Gotelee, Suffolk solicitors.

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