Investing in the UK
Proposals by the UK Government may create extra hurdles for foreign companies looking to invest in the property market.
The UK Government has proposed the creation of a new register to list overseas companies, other legal entities and their beneficial owners that own or want to buy property in the UK. This has potential implications for overseas entities who already own property in the UK, as well as new investors.
The Government’s objective is to address concerns about overseas entities using the UK property market to invest and launder money from illegal activities. The aim is to protect the integrity and reputation of the property market by increasing transparency of ownership i.e. identifying the real beneficial owners.
There is no equivalent register to this anywhere in the world. However, Companies House in England and Wales already has a ‘People with Significant Control’ (PSC) register in place and the Government proposes to use this as the blue print. The information to be disclosed in the new register will be similar, including the beneficial owner’s name, date of birth, nationality, a service address, resident country, nature of their control and date that they obtained this control.
The types of property ownership caught by this register will include freehold properties and leasehold properties with an initial term of 21 years or more.
Overseas entities who already own property will be given a 12 month transition period to register. After that, HM Land Registry will automatically put a restriction on all properties owned by unregistered overseas entities to prohibit them from selling, granting a lease of more than 7 years, or securing a legal charge against them.
Exact details of the proposal are yet to be finalised, and whilst it is likely that the Government will proceed, what is less certain is how and when. The timing is sensitive due to the potential uncertainty Brexit may bring to the property market and the Government will want to strike a balance between achieving its aims and overly burdening commercial activity, to ensure the UK is more, not less, attractive for legitimate property investors.
For more information about this proposal, please contact Sophie Robins, Solicitor, Property Services.
Published: 6 Sep 2017