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New Obligation for Overseas Entities with Property or Land in the UK

Dear clients,

Kindly note that the UK Government has passed into law the Economic Crime (Transparency and Enforcement) Act 2022 (“the Act”) which creates the Register of Overseas Entities (“the Register”), as a measure to combat economic crime and increase the transparency of overseas entities, which own land or property in the UK.

The Register came into force on 1 August 2022, with a 6-month transitional period, until 31 January 2023, for all relevant entities to comply with the new registration requirements.

Owners and leaseholders of property or land in the UK held by an overseas entity must formally register information about the entity and beneficial owners at the Register by 31 January 2023

Three important points

  1. What must be done?

All overseas entities in scope are required to:

  • Identify their registrable beneficial owners; and

  • File the required information about them at the Register.

Only an approved and assured UK agent (the “UK Agent”) can identify and file the registrable beneficial owner information, which must first be verified independently by said UK Agent. Please be advised that the UK Agent must not be related to the entity being verified, as established by the Act.

  1. Penalties for non-compliance 

The following penalties will be applicable for non-compliance with these obligations, as established by the Act, to wit:

Sanctions on the property

  • Restrictions on buying, selling, transferring & leasing land.

  • Restrictions on creating a charge against land or property in the UK.

Sanctions on the entity and company officers

  • Fines of up to £2,500 per day on the entity.

  • Criminal sanctions on company officers may lead to a prison sentence of up to 5 years.

Investing in Property or Land in the UK: Factors for Overseas Entities to Consider

The United Kingdom has always been a popular choice for foreign investors who are looking to invest in property or land.

The stability of the country’s political and economic environment, combined with favorable tax laws for foreign investors, makes it an attractive destination. However, it’s important for these investors to keep in mind a few important factors.

Before investing, it’s crucial to understand the legal and regulatory requirements of owning property or land in the UK.

This includes obtaining the necessary planning permission and making sure the property complies with health and safety standards, as well as paying taxes and any other fees.

Potential restrictions and obligations must also be taken into consideration, such as limitations on the use of the property and requirements for paying rent or other charges.

To mitigate these risks and ensure the safety of their investment, many foreign investors choose to work with professional property management companies.

At OMC Group we have the expertise and can help investors navigate the complex legal and regulatory environment and make sure their investment is well protected and managed.

Despite these challenges, the UK remains an attractive destination for foreign property investors.

The UK still is a strong economy, stable political environment, and favorable tax laws make it a great choice.

For this reason, it’s important for these investors to carefully consider the potential risks and obligations involved in owning property or land in the UK and take steps to minimize these risks and protect their investment.

At OMC Group we stand ready to assist you. Should your Overseas Entity require assistance to comply with this new obligation, kindly contact us at [email protected]