On 1 August 2022, the new Register of Overseas Entities (Register) created by the Economic Crime (Transparency and Enforcement) Act 2022 (Act) went live. Overseas entities that own or acquire relevant UK land interests¹ are required by the Act to register details of their beneficial owners on the Register. Alongside criminal liability for non-compliance, there are detailed property provisions in the Act that restrict the ability of a non-compliant overseas entity to deal with UK land. Those property provisions come into force today, 5 September 2022, and mark a significant change in practice for all overseas entities.

From today:

• If an overseas entity acquires a qualifying estate (i.e. a freehold estate in land or a leasehold estate in land granted for a term of more than seven years from the date of grant), it will immediately, from the time of acquisition, be subject to restrictions on its ability to transfer, let and charge that estate unless it is registered on the Register or can prove one of the statutory exceptions as at the time of the relevant disposition. Breach amounts to a criminal offence.
• No overseas entity can apply to register itself as proprietor of a qualifying estate at the Land Registry (and thereby become the legal owner), unless it can prove it is already registered on the Register. If the Land Registry application is lodged on or after 5 September 2022 it is irrelevant that the acquisition occurred prior to that date, the overseas entity must still comply. Any attempt to lodge an application in breach will be rejected. 
• Once an overseas entity is registered as proprietor of a qualifying estate at the Land Registry, title will be subject to a restriction restricting the ability of the overseas entity to transfer, let and charge that estate unless it is registered on the Register or can prove one of the statutory exceptions as at the time of the relevant disposition. Breach amounts to a criminal offence.

Overseas entities that were already registered at the Land Registry as proprietor of a qualifying estate prior to 1 August 2022 will have the benefit of transitional provisions in relation to that particular estate, giving them an extra six months (up to and including 31 January 2023) to comply.

All overseas entities that own a qualifying estate (whether or not they became registered proprietor before or after 1 August 2022) must comply with the obligations in the Act to disclose to the Companies House Registrar on or before 31 January 2023 details of:

• any transfer, letting (for more than seven years) or charge of that estate made between 28 February 2022 and 31 January 2023 (both dates inclusive); and
• their beneficial ownership immediately prior to the relevant disposition,

either as part of their application to register on the Register or, if not required to register, as part of a standalone disclosure obligation pursuant to the Act.

For more information on the Register (including the property restrictions) and the application of the new rules, please see Dentons – UK Register of Overseas Entities – impact on English and Welsh real estate.

1. While the Register and Act apply across the UK, this note only considers the position for English and Welsh real estate.