Who really owns that property?

The government announced in December 2017 that, as part of its new Anti-corruption Strategy, it will publish a draft bill during the current parliamentary session to establish a public register of the beneficial ownership of overseas legal entities owning, or wanting to buy, property in the UK. It has also just announced that the register will go live by early 2021.

A key driver for the proposed new register is to try to ensure that the UK property market is seen as fair, transparent and clean. On the other hand, the government is conscious of the need to strike the right balance, so that the register does not deter foreign investment in the UK.

Comments on proposals for such a register were invited last year. These included that:

• Overseas entities would not be able to buy, sell, charge or grant a long lease of property in the UK unless they were registered in the new register, to be held at Companies House.
• The registration requirement would be retrospective and overseas entities that already own property would be given a year to comply.
• The register would record details of beneficial ownership above a certain threshold. By “beneficial owner” the government means the person who benefits from the legal entity and who exercises control over it and the assets it holds.
• Where another legal entity, rather than a person, is the beneficial owner, disclosure of ownership further up the chain would be required until the ultimate individual beneficial owner is identified.

Once in place, the register will supplement the existing “Persons of Significant Control” (PSC) regime which came into effect in the UK on 6 April 2016. This requires certain UK companies (and other legal entities) to keep a register of people with significant control over the company and to record that information at Companies House.