The Economic Crime (Transparency and Enforcement) Act 2022 (ECTEA) was introduced on 15 March 2022 and key aspects of the Act came into force on 1 August 2022, placing new obligations on overseas entities holding UK real estate.
What Does The New Economic Crime Act Enforce?
The Act aims to tackle concerns around ‘dirty money’ being used to purchase UK property and improve transparency on overseas ownership and control of the property in the UK. To achieve this, a new Register of Overseas Entities (ROE) was launched on 1 August 2022.
Under the new regime, all overseas entities who already own, or are seeking to acquire UK real estate (a freehold or lease granted for more than seven years) are required to identify its beneficial owner(s) and/or managing officers and register them on the ROE maintained by Companies House. Information supplied to the register will need to be verified and the overseas entity will need to update its information annually.
The Implications on Overseas Entities
An ‘overseas entity’ includes any body, corporate, partnership or any other entity that is governed by the law of a country other than the UK, including the Channel Islands and the Isle of Man.
Significantly, the ECTEA applies retrospectively, meaning that land acquired in England and Wales by foreign entities since 1 January 1999 and in Scotland since December 2014 will be caught by the registration requirement. All overseas entities with land ownership in the UK will need to apply for registration at Companies House within the transitional period of six months (by 31 January 2023). Overseas entities that owned land on 28th February 2022 but have subsequently disposed of it must also register by 31 January 2023.
From 5 September 2022, all overseas entities which acquire a registrable interest in UK real estate (being a freehold interest or lease exceeding seven years) will need to register on the ROE to register ownership at the Land Registry and therefore obtain the legal title.
Let Us Help You
The new regime is likely to cause a number of challenges and delays to transactions in the coming months as overseas entities and their advisers get a handle on the new requirements.
At Witan Solicitors, our services and legal expertise span across borders. If you need support with your international assets, get in touch with our team.
