Economic Crime Act – update for overseas entities with interests in UK real estate
3 min read
The Economic Crime (Transparency and Enforcement) Act 2022 (the "ECTEA") has been introduced as part of the government’s strategy against overseas criminals who launder money through UK real estate. The ECTEA requires overseas entities which own, or intend to buy, sell, transfer, lease or charge UK real estate to register at Companies House and to disclose details of their beneficial owners. The aim is to achieve greater transparency of real estate ownership in the UK.
- A new Register of Overseas Entities was launched at Companies House on 1 August 2022.
- From 1 August 2022, all overseas entities (with very limited exceptions) which own, buy, sell, transfer, lease (of more than seven years) or charge UK real estate will need to register in the Register of Overseas Entities. Once registered, the overseas entity will be given a unique Overseas Entity ID which can be supplied to the Land Registry for registration purposes.
- In the case of secured lending, overseas property owners must be registered on the Register of Overseas Entities in order for the mortgage to be registrable at the Land Registry.
- Any overseas entity which has acquired UK real estate on or after 1 January 1999 but before 1 August 2022 will benefit from a transitional period and must register as an overseas entity by no later than 31 January 2023. This is the case even if no disposition of the land is intended.
- From 5 September 2022 all overseas entities which acquire a registrable interest in UK real estate (being a freehold interest or lease of more than seven years) will need to register on the Register of Overseas Entities in order to register ownership at the Land Registry and therefore obtain legal title.
- Overseas entities that sell, charge or lease (of more than seven years) any UK real estate within the period commencing on 28 February 2022 and ending on 31 January 2023 must also register and deliver to Companies House certain details of the disposition by no later than 31 January 2023.
- Failure to register (unless certain limited exceptions apply) or submitting false information can result in both civil and criminal sanctions being applied against the overseas entity and its officers. The Land Registry has a duty to place restrictions on registered titles of UK real estate owned by overseas entities where the registration requirements have not been satisfied.
- The ECTEA will require continuing compliance and the overseas entities will be required to update the Register of Overseas Entities annually.
We recommend that the above requirements are discussed with your corporate service provider as soon as possible and that prompt action is taken to register on the Register of Overseas Entities to avoid delays to transaction timetables and any breach of the law.
For further information and to discuss how these requirements may affect you and your business, please get in touch with your usual White & Case LLP contact.
Please note this briefing note explains the position for England and Wales. The ECTEA introduces equivalent provisions in Northern Ireland and Scotland.
This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
© 2022 White & Case LLP