Real Estate Blog: The Economic Crime (Transparency and Enforcement) Act 2022 (‘the Act’) Part 2
Part 2 of 4 – The impact on registration of UK property purchases
HM Land Registry will be entering restrictions in the registers of title to qualifying property if satisfied:
- that an overseas entity is registered as the proprietor of the property; and
- that the entity became registered as the proprietor pursuant to an application made on or after 1 January 1999.
The restriction will prohibit the registration of dispositions unless, at the time of application, the entity is either a registered overseas entity or exempt, or the disposition is made pursuant to a statutory obligation, court order, occurs by operation of law, or is made with consent of the Secretary of State. Evidence that the overseas entity is compliant with its updating duties will also be required.
The Secretary of State may, by written notice, exempt an overseas entity from its obligation to identify registrable beneficial owners, if is satisfied that to do so is either in the interests of national security, or is necessary for the purposes of preventing, or detecting serious crime. Serious crime includes offences attracting a prison sentence of three years or more, offences involving the use of violence, or that result in substantial financial gain, or offences committed by a large number of persons in pursuit of a common purpose.
Buyers/tenants will not be able to acquire legal title to qualifying property from overseas entities unless the provisions of the Act are complied with. Lenders will not be able to acquire legal charges when refinancing existing property owned by an overseas entity unless the overseas entity is a registered overseas entity. Lenders will also be unable to acquire legal charges over land purchased by an overseas entity, as the transfer of that land will not be capable of registration at HM Land Registry until the overseas entity is registered.
We await further clarification from HM Land Registry as to how this will work in practice. There are numerous questions to be answered, including:
- How will HM Land Registry identify all titles held by overseas entities and how long will this take?
- What is the estimated timescale for HM Land Registry to complete registration of the restrictions?
- Will HM Land Registry enter restrictions to all titles owned by overseas entities as a precaution (because it may be difficult to determine whether some entities applied before or after 01.01.99)? If so, will overseas entities be able to apply to remove restrictions if they hold evidence that they made an application before 01.01.99?
- Considering existing HM Land Registry backlogs of up to two years for completing registrations for complex applications, do HM Land Registry have the resources to deal with the requirements of the Act?
- What will happen if a restriction should have been registered at the point a disposition is made, but has not been?
We will keep you updated as these questions start to be answered.
If you would like any further information in relation anything covered in this Real Estate Blog, please do not hesitate to contact Alice Dockar, Aamir Hussain or Lucy Johnson. Look out for the third blog in the series, which will explore the operation of the Companies House register.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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