Labour leader Sir Keir Starmer has warned the Government that six months is too long a deadline for anonymous property owners to reveal their identities, but a change from Ministers looks unlikely.
Last week the Prime Minister ordered a toughening of the economic crime bill, arguing it would make it easier for the government to go “harder and faster” in placing individuals linked to Russian President Vladimir Putin under sanction.
The UK has so far imposed fewer sanctions on Kremlin-linked oligarchs than either the EU or US.
But Ministers are resisting calls from the Labour leader, who successfully lobbied ministers to shorten the originally proposed 18-month registration period, to force anonymous foreign owners of UK land and property to reveal their identities within 28 days.
Ministers have warned that “decent law-abiding citizens” could be caught up in a crackdown as they would not have sufficient time to understand and act on the rules.
Starmer successfully lobbied ministers to shorten the originally proposed 18-month registration period arguing it allowed nefarious elements to “launder their money out of the UK property market and into another safe haven”.
Under the new rules, some 95,000 foreign owners will have six months to reveal their identities or lose the right to sell the asset and face fines of £2,500 a day.
It is not clear when the register will come into force, but the Government has said that implementation will follow “at pace” after Royal Assent.
How it will work
- The register will be kept by Companies House. All non-UK entities which hold freehold titles or leaseholds of longer than seven years in England and Wales (qualifying estates) will have to register. Similar rules will apply where overseas entities hold property elsewhere in the UK
- The entity must supply information about itself and its beneficial owners. If there are no beneficial owners the entity must state this and provide information about its managing officers. The definition of beneficial owner and the information required is broadly the same as that required in relation to the PSC (persons of significant control) regime which already applies to UK companies
- The requirement to register will apply to overseas entities that already own land in the UK as well as those which first acquire land here after the new legislation comes into force. This will go back as far as ownership registered on or after 1 January 1999 for England and Wales and 8 December 2014 for Scotland
- Transitional provisions will allow overseas entities that already own UK land a grace period of six months to comply with the registration requirements. This period has been widely criticised as too long, so it may well be amended as the Bill goes through Parliament
- Once registration information provided has been verified, Companies House will issue the entity with an overseas entity ID and record this ID in the register. Without an overseas entity ID an overseas entity cannot be registered at HM Land Registry as the owner of any land it acquires
- There is an updating duty requiring the information to be updated at least every 12 months in order for the entity to retain its registered overseas entity status
- HM Land Registry will place restrictions on titles currently held by overseas entities to prevent sales, charges and leases of more than 7 years being registered unless the entity is a registered overseas entity at the time of the transaction
- The obligations are backed up by criminal sanctions on the entity itself and any officer in default (fines and imprisonment)
