If you are an investor currently using overseas entities to hold UK property you should be aware that the UK Government is putting together proposals for greater transparency of the beneficial owners of UK properties owned by overseas entities.
The regulations will have implications for:
- the risk management, timing and due diligence in real estate investment transactions;
- overseas entities who will need to ensure compliance is planned well ahead of closing;
- sellers and mortgagees who will also need to ensure the overseas buyer has complied with the regulations; and
- existing overseas landowners who are seeking to dispose of or grant a charge over their UK property.
How will the new register work?
The UK will be the first country to have such a register and if these proposals are implemented we will see –
- overseas entities being prohibited from selling their existing properties or creating long leases or charges over the property without compliance with the new regulations. This will be enforced by automatic entries being added to the Land Registry’s title register; and
- overseas entities buying property facing the complete reversal of any transaction if they cannot prove compliance at the time they register the land transfer or lease with Land Registry.
The UK Government are working to fulfill the promise they made at the International Anti-Corruption Summit in May 2016. We are in a consultation period at the moment as they look to ascertain how the proposals might influence those planning to invest in the UK and any impact on the UK economy. Should you wish to have your say, you only have until 15 May 2017 to submit your feedback. A link to the response form is here.
We in the Reed Smith Real Estate group will continue to follow and report on the development of these proposed regulations, so watch this space.