The government plans to implement a public register of the beneficial ownership of overseas legal entities owning, or wanting to buy, property in the UK.
A recently published response to a call for evidence on the topic sets out some of the detail of how the government intends to do so. In broad brush terms:
- All legal forms which can hold properties will in principle be within the scope of the new register, but there will be some flexibility for exclusions, such as entities where beneficial ownership information is already transparent.
- Leasehold interests in a property will be included if they are registrable at the Land Registry – generally these are leases with a term of more than 7 years.
- The definition of “beneficial owner” for the purposes of the new register will be aligned to the definition of “people with significant control” (PSC) under the PSC regime for UK companies. The definition will be adapted to cover different types of entity.
- Where an entity is unable to give information about its beneficial owners, details of its managing officers will be required instead.
- The period within which overseas entities that already own a property must comply with the new registration requirements is likely to be longer than the one year originally proposed.
- In order to ensure compliance, statutory restrictions will be noted on the title register of affected properties, backed by criminal offences for failure to comply.
- As an additional sanction, only a beneficial interest - not legal title - to a property will pass to an overseas legal entity that does not have a valid registration number at completion.
What next? The government intends to publish a draft bill over the summer, with the register to be operational in 2021.