As of today, Part 1 of the new Economic Crime (Transparency and Enforcement) Act 2022 has come into force and Companies House has launched the Register of Overseas Entities, which is now live. New land registration requirements in the Act will also soon come into force on 5 September 2022. The Act will have consequences for both existing owners of land in the UK and prospective buyers.

Overseas entities that currently own a registered “qualifying estate” in England and Wales must either dispose of such property or have made an application for registration on the Register of Overseas Entities declaring their beneficial owners (or their managing officers) within a six-month transitional period from 1 August 2022 if they wish to avoid sanctions, including fines and the potential imprisonment of their officers. A “qualifying estate” is a freehold or a leasehold granted for a term of over 7 years from the date of grant. Separate provisions apply to land in Scotland and Northern Ireland.

Owners should be aware that from 5 September 2022 the Land Registry will start adding restrictions to all registered qualifying estates where the overseas entity became the registered proprietor pursuant to an application made on or after 1 January 1999. The restriction will prevent the overseas entity from disposing of its property (which includes creating a charge over such property) after the end of the six-month transitional period, unless at the time of the disposition the entity is a registered overseas entity, the entity is exempt, or one of the limited exceptions in the legislation applies. Compliance with the restriction will be evidenced by providing a valid Overseas Entity ID number (as issued by Companies House) as part of the Land Registry application or a conveyancer’s certificate if one of the exceptions applies.

Any non-exempt overseas entity that will still hold a relevant interest in UK land once the transitional period has ended must therefore apply for registration on the Register of Overseas Entities by 31 January 2023. Failure to do so will result in such entities no longer being able to deal freely with their properties, as well as in potential criminal sanctions. It should be noted that the Act contains information notice requirements in relation to identifying registrable beneficial owners which must be complied with before an application for registration can be made. There are also detailed verification requirements. This all needs to be factored into the timing of any application for registration.

Any overseas entity which disposes of all of its qualifying property prior to the end of the transitional period does not need to apply for registration but will still be required to disclose beneficial ownership information to the registrar. This information requirement applies retroactively to all dispositions of relevant property that took place on or after 28 February 2022 but before the end of the transitional period. This is the case even if the overseas entity no longer owns any relevant interest in UK land at the end of the transitional period.

Buyers of relevant land must also be wary. In addition to the restrictions on overseas entities disposing of their qualifying estates after the end of the transitional period, the legislation also prevents any application from being made to register an overseas entity as the new proprietor of a qualifying estate in England and Wales, unless the entity is a registered overseas entity or exempt. For the registration of an overseas entity as the new owner of a relevant property, there is no transitional period. As a result, any non-exempt overseas entity that acquires a qualifying estate in England and Wales from 5 September 2022 must be registered on the Register of Overseas Entities.

At this stage, it is not clear which, if any, overseas entities will be exempted from the new requirements.