Detailed proposals published by the Government
As part of its drive towards greater transparency and trust in business, the Government announced plans in May 2016 to create a register of the beneficial owners of overseas companies which own properties in the UK or which are bidding for government contracts.
The register will be kept by Companies House and beneficial ownership will be defined in a similar way to the definition used in the PSC Register (persons owning 25% or more of the share capital or voting rights will be a controller, but so will other persons who pull the strings through intermediate or nominee owners).
Under detailed proposals published on the 5 April 2017, the Government may also create a criminal offence if there is a failure to keep the register up to date.
With regard to UK property ownership, the proposals suggest that overseas entities wishing to purchase a property in the UK will need to first register with Companies House to obtain a unique reference number to accompany registration of title at the Land Registry. Existing overseas entities which own UK property will have a year to collate the information and register. As an anti-avoidance provision, the regulations are also likely to capture registration of long leases or legal charges without first having the Companies House reference number.
Whilst the Government acknowledges the value of inward investment into UK property from abroad, which amongst other things fuels the construction industry and banking, insurance and service industries surrounding the real estate sector, the clear aim is to provide greater clarity on foreign ownership and ultimately to combat money laundering via the UK real estate market by acting as a deterrent to investors who are not legitimate.
If you would like further legal advice on foreign corporate ownership of UK property, the PSC register or any other aspect of company commercial law please do not hesitate to contact our commercial team on 01733 882800 or email [email protected].
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