Economic Crime (Transparency and Enforcement) Act 2022
The Overseas Entity Register comes into force today, under this Act, and will affect the timing and negotiation of property transactions.
We advised you in June that the Economic Crime (Transparency and Enforcement) Act 2022 (the Act) will affect property transactions entered into with overseas entities from its commencement.
Today (1 August 2022) Companies House opens its Overseas Entities Register for registration by overseas entities that now, or in the future, own registered land (a freehold or a lease granted for more than seven years). A party entering into a property transaction with an overseas entity will need to check that it is registered as an overseas entity or that it is exempt from registration.
- A restriction will be entered on the title(s) of overseas entities already owning qualifying registered land and will come into effect from and including 1 February 2023, preventing dealings with their title (a transfer, the grant of a lease for more than seven years or a charge).
HM Land Registry will notify overseas entities that the restriction will be noted on their title(s) and of the need to register at Companies House if they have not already got the process underway. The exact time when this will be undertaken is not known.
- An overseas entity purchasing a freehold property or taking a lease for more than seven years will need to be registered as an overseas entity with Companies House to be registered as proprietor of the title at HM Land Registry and a similar restriction will be entered on that title for any future dealings that it may enter into.
We can anticipate that there will be some property transactions entered into before the Act was contemplated or knowing when it might come into force. The land registration aspects of the Act do not come into effect until 5 September and there seems a small window of opportunity for overseas entities to make applications to HM Land Registry notwithstanding that they are not yet on the Overseas Entities Register. For transactions completed or applications received on or after 5 September, overseas entities will have to act quickly to ensure that they are registered with Companies House to allow their HM Land Registry application to be completed.
The government has recently published guidance on how to register an overseas entity, including what information must be submitted and the requirement for verification checks by a UK regulated agent.
We can expect the coming into force of the Act to slow down transactions with overseas entities as we await clarity enabling those entities to register or claim exemption (where possible). Further Land Registry restrictions will prevent registration of transactions and it is a criminal office by the overseas entity to enter into a transaction without registration (where required). These changes affect both sellers and buyers, landlords and tenants as all parties to the transaction will want to secure registration of the transaction at HM Land Registry where required. We will keep you advised of how this might affect you: please speak to the lawyer dealing with your transaction in the first place.
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