The Register of Overseas Entities came into force in the UK on 1 August 2022 through the new Economic Crime (Transparency and Enforcement) Act 2022 (ECTEA 2022). This is directly applicable to a wide range of structures commonly used to hold UK real estate, including partnerships, trusts and companies domiciled in Jersey and Luxembourg. Each of these entities will need to register with Companies House to obtain an Overseas Entity ID (OE ID).
In terms of the applicable law, the ECTEA 2022 amends the Land Registration Act 2002 (LRA 2002) by inserting a new Schedule 4A. Schedule 4A LRA 2002 will prevent the Land Registry from registering an overseas entity as proprietor of land or property, unless the overseas entity has first obtained an OE ID.
The register is administered by Companies House in the UK and requires overseas entities who want to buy, sell or transfer property or land in the UK to register their beneficial owners or managing officers with Companies House.
- Overseas entities include companies and other organisations which have legal personality and are governed by the law of a country or territory outside the UK.
- Beneficial ownership is subject to certain definitions and exemptions but is broadly defined as an individual or entity with significant influence or control over the overseas entity, with the >25% rule being applied.
- Independent verification of relevant information relating to the beneficial owners and managing officers must be completed by a UK-regulated agent. The agent completes its checks and then supplies an agent assurance code and verification statement. Registration of the overseas entity cannot be completed without this step.
- Following successful registration, an Overseas Entity ID (OE ID) will be issued which must be given to the Land Registry in order to register with the Land Registry any charge, purchase, sale or transfers of land or property in the UK
- Most of the information given to Companies House about overseas entities, beneficial owners and managing officers will be publicly available on the Register of Overseas Entities.
- The overseas entity must file an annual update one year after it was registered and every year after that.
- Provision of the OE ID to Land Registry will be required for all amendments to the registry from 5th September 2022.
- Registration needs to be completed by 31 January 2023 by overseas entities who already own or lease land or property in the UK, acquired:
- since 1 January 1999 in England and Wales
- since 8 December 2014 in Scotland
- since 1 August 2022 in Northern Ireland
- Overseas entities who sold land or property after 28 February 2022 also need to provide details of those disposals.
- Failure to update Companies House may lead to sanctions including being fined up to £2,500 per day, a prison sentence of up to 5 years and restrictions on buying, selling, transferring, leasing or charging their land or property in the UK.
- Without the Overseas Entity ID, the Land Registry will not process any transactions related to that entity from 5th September 2022 onwards.
How Langham Hall can help
The 31 January 2023 deadline provides sufficient time for updating the register for existing ownership. However, the 5th September deadline may come as a surprise to some and will cause issues for transactions needing to complete after that date if no Overseas Entity ID has been obtained. In order to be best placed to support our clients, Langham Hall has registered as a verification agent and we are providing a service covering the independent verification process, the overseas entity registration process and the annual update. We are seeing keen interest in this service and would welcome enquiries from those seeking assistance.