Government proposes new register for overseas property owners
On 5 April 2017, the government published a “call for evidence” inviting feedback on a proposed new register of beneficial owners of overseas legal entities that either own or want to buy UK property and will now be considering responses following the deadline of 15 May.
The proposal comes in the wider context of the government’s commitment to making property ownership more transparent.
As there is no international equivalent, the government has taken the UK Company PSC register as its starting point so that many features will be similar in the new register which will also be held by Companies House and published on their website free of charge.
Its proposed that the scope of the register extends to all overseas legal entities capable of holding UK property, or bidding on central government procurement contracts and will record details of the beneficial ownership of such entities who wish to buy, or already own, UK property – including long leases of over 21 years.
By beneficial ownership, the government means the natural person e.g. the individual who benefits from the legal entity and who exercises control over it and the assets it holds. It is proposed that the precise definition should be based on that used to identify people with “significant control” for the purposes of the PSC Register – most commonly being a person who holds more than 25% of the shares of the company or voting rights in the company – but adapted to accommodate different types of entity.
It is intended that overseas entities will not be able to buy, sell, charge or grant a long lease until they register. Overseas entities who already own properties will be given a year to register or sell. At the end of the transitional year, the right to sell, charge or grant a long lease will be lost until registration takes place – a note to that effect being entered on the title register at the Land Registry.
Entities wishing to buy or take a long lease will have to apply to register their beneficial ownership at Companies House before doing so and obtain a registration number to provide the Land Registry on an application to register their title following completion. The government is also exploring the option of making the transfer of title document void if an overseas entity does not have a valid registration number on completion. On registration, a note will be entered on the title reflecting the new register`s requirements having been complied with.
Whilst the full granularity of new register still needs to be finalised, the government have made their intentions clear that it is not likely a question of if but rather when and how. As lawyers for overseas clients, we are on stand by to provide further updates as and when there are further announcements. Watch this space.