The Act requires overseas entities that own, wish to purchase, or dispose of, UK real estate to register details of their beneficial owners with the UK Companies Registry.
The Act will apply retrospectively to overseas entities registered as proprietors of land in England & Wales at HM Land Registry (HMLR) further to applications made on or after 1 January 1999, and in Scotland since 8 December 2014. Overseas individuals holding property through a UK corporate vehicle will not be caught by the Act as a UK company is already subject to the PSC (Persons with Significant Control) regime which requires disclosure of the ultimate beneficial owner of a UK company.
The key provisions of the Act came into force on 1 August 2022.There is due to be a 6-month transitional period, but the timing of the commencement of this is currently unclear and we are waiting for Companies House and HMLR to confirm the position. If you fall within the remit of this Act, it is recommended that you commence the registration process, as soon as possible, to prevent any delays in registering your overseas entity ID obtained from Companies House with the HMLR, once the registration opens.
Overseas entities must provide details of their beneficial owners to the Companies Registry in order to register, following which they will be given an overseas entity ID. If the overseas entity's beneficial owner is another entity, then it must continue up the chain of ownership to disclose the beneficial owners or, if there are none, it must include a statement from its managing officers (i.e. its directors, managers or secretary).
The Government requires the same information for the new register as for the PSC register. For individuals, governments and public authorities and other legal entities, the information will be its name, country of incorporation, registered or principal office, service address, email address, the entity's legal form, its governing law and any public register in which it is entered, the date upon which it became a beneficial owner and an explanation as to why it qualifies as a beneficial owner.
HMLR will enter restrictions on the register of all qualifying estates if it is satisfied that the registered proprietor is an overseas entity whose proprietorship was registered further to an application made on or after 1 January 1999 and an exemption does not apply. So, current owners of registered UK real estate will be required to register and obtain an overseas entity ID (as well as intending purchasers and tenants of registrable leases).
An intending buyer will have to apply to the Companies Registry to register details of its beneficial ownership and obtain an overseas entity ID number to enable it to register both its legal title to the property and, where it has borrowed monies to fund the purchase, for its lender(s) to register a mortgage of the land. A restriction will be added to the title register that prohibits dealing with the property if the owner is in breach of the registration requirements.
Overseas entities will be required to update the information provided to the Companies Registry annually. Failure to do so will result in criminal sanctions. Overseas entities will be able to apply to be removed from the register if they cease to be interested in UK real estate. Note that the updating obligation subsists for as long as the overseas entity remains registered, even if it no longer owns any UK real estate. So once property is sold, an overseas entity should apply to be removed from the Companies Registry.