The UK Government has recently announced that a public register of ultimate owners of overseas entities holding interest in UK property will be released by early 2021 (announcement here). Leasehold interests are proposed to be in scope where a lease is required to be registered and the original term is for more than 21 years.
All overseas entities acquiring or already holding UK property will be required to provide details of their ultimate owners and controllers for the register. A broad concept of "control" is proposed, which would largely follow that employed for the purpose of the Persons with Significant Control (“PSC”) public register in operation since June 2016 disclosing ultimate owners of UK companies and limited liability partnerships. Overseas registered businesses that are involved with UK central Government procurement exercises would also be required to register. No grandfathering is proposed: the Government is contemplating allowing a one-year period for existing structures to comply. The register is to be kept at Companies House and operated on the basis of a 'registration number' being issued to overseas entities that have provided the requisite ownership information.
It is expected that failure to provide the required information will be a criminal offence and limit the property owner’s ability to sell or let the property or use the property as security. For example, in the future when an overseas entity is applying to register itself as the legal owner of a UK property, the land registry application form will require the registration number issued by Companies House. Without this number being included, the form will not be accepted by the land registry and the application will be cancelled.
The UK government’s timetable envisages draft legislation will be published in summer 2018 with legislation being introduced to Parliament in summer 2019. The register would then be published in early 2021. A response to the consultation regarding the register, which closed on 15 May 2017, is expected to be published shortly.
The Government’s stated intention of the public register is to ensure the integrity and reputation of the UK property market by preventing the profits of criminal activity being warehoused in UK property. However, the register will have a much broader impact given it will apply to all overseas entities holding UK property. The proposed register follows various other UK and international initiatives, which drive at transparency of ultimate individual ownership and facilitate investigations by tax and other authorities, such as the PSC register, the new HMRC administered register of trust beneficiaries, Country-by-Country Reporting, automatic exchange of tax rulings, FATCA and the CRS.