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https://hmlandregistry.blog.gov.uk/2022/07/13/register-of-overseas-entities-how-it-affects-land-transactions/

Register of Overseas Entities: How it affects land transactions

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This blog post has been updated. Companies House intends to launch the Register of Overseas Entities on 1 August 2022.

The Economic Crime (Transparency & Enforcement) Act 2022 requires overseas entities that own or acquire property in the UK to register with Companies House. Companies House intends to launch the Register of Overseas Entities on 1 August 2022. A link to the service will be shared with those subscribed to the Companies House newsletter once it’s gone live. It is planned that the land registration elements of the Act will come into force on 5 September 2022. This will allow time for those currently engaged in a relevant land transaction to comply with the requirement to register with Companies House and obtain an Overseas Entity ID (OE ID) number before making an application to the relevant land registry.

Companies House will publish guidance on how to register the information they will require about persons who own or control the overseas entity. Once registered, Companies House will issue the overseas entity with an OE ID. More information on this can be found in this joint blog.

How will this affect registered proprietors and property transactions?

The Act prohibits any application being made to HM Land Registry to register an overseas entity as proprietor of land unless, at the time of the application, the overseas entity has obtained its OE ID.

Overseas entities due to acquire land soon should start preparing now to apply for an OE ID. Once the Act commences, they may need to apply promptly to Companies House in time so they can still apply for land registration within their priority search period. We must reject a land registration application if an overseas entity is needed but has not been provided.

Ultimately, the Act will prohibit overseas entities from transferring, leasing or charging their land unless, at the time of the disposal, they have obtained an OE ID.

There are some exceptions that apply. In particular, anyone who successfully applies to register a transfer, lease or charge from an overseas entity that owned land when the Act commenced will not be prevented from registering the disposition by a restriction on disposition if they make their application within the first six months of the Act taking effect.

How has HM Land Registry prepared for these changes?

We have worked closely with Companies House to make the new register a success.

We will publish amended versions of forms that will allow you to provide the OE ID. We are working on changing our external systems, including portal and Business Gateway APIs, to allow for the OE ID to be provided with your application.

We will also be publishing an updated version of our Practice Guide 78 which will include detailed information about our requirements and guidance about how the Act will apply in different registration scenarios.

What should I be doing now?

If you are negotiating to buy, lease or take a mortgage from an overseas entity, remember: the provisions of the Act preventing the registration of dispositions by overseas entities that already own land will only affect the application to HM Land Registry to register your disposition if you lodge it more than six months after the Act commences.

If you are an overseas entity landowner any disposition you make of land you already own can be registered within six months of commencement even if you do not have an overseas entity ID when you make the disposition. However, you will still have to comply with other reporting obligations in the Act. You may also find that the person taking the disposition still asks you to register with Companies House before they will proceed.

If you are an overseas entity that owns property or is planning to purchase property you should start planning for these requirements now. Please also ensure you have read the latest blog posts published by Companies House about the secondary legislation for the Register of Overseas Entities. Secondary legislation, or statutory instruments, provide the practical measures needed for the Act to come into force. Companies House will publish detailed guidance on GOV.UK in the coming weeks.

If, after considering this and the guidance provided by Companies House you do not know what effect the Act will have on your plans, you should take legal advice. Remember – plan ahead and expect the Act to come into force very soon.

We welcome your comments about this blog in the comments below. Please note that we are unable to discuss individual cases through the comments section and would request that all such queries be directed to our Contact Us web form where you will receive a response as soon as possible.

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28 comments

  1. Comment by Emilia Chmielarz posted on

    There seems to be no requirement for overseas entities that bought a property in England and Wales pre-January 1999 (December 2014 for Scotland and 5 September 2022 for Northern Ireland) to register and obtain OE ID.

    Given this, can UK property bought by an overseas entity before January 1999 (other dates respectively) be transferred to a new proprietor without the overseas entity needing to register and obtain OE ID?

    Reply
    • Replies to Emilia Chmielarz>

      Comment by Gavin Curry posted on

      Thanks for your question Emilia. Yes, that's the case.

      Reply
      • Replies to Gavin Curry>

        Comment by Declan posted on

        Can you confirm that this is still the case? how will an entity without an ID be able to transfer property to a new proprietor?

        Reply
        • Replies to Declan>

          Comment by Gavin Curry posted on

          Hello Declan

          We assume that the overseas entity in question was registered as proprietor prior to 1 January 1999.

          Practice Guide 78 confirms that in relation to England and Wales, for which HM Land Registry is responsible, the Economic Crime (Transparency and Enforcement) Act 2022 (ECTEA 2022) only applies to overseas entities that were registered as proprietor of a qualifying estate on or after 1 January 1999. It also explains that paragraph 6 of Schedule 3 to the ECTEA 2022 places a duty on HM Land Registry to enter a restriction in the register of a qualifying estate, if the registrar is satisfied that an overseas entity is registered as proprietor of the estate and became registered as the proprietor in pursuance of an application made on or after 1 January 1999.

          If the new proprietor is also an overseas entity, then consideration should be given to the guidance that we provide in Practice Guide 78 (https://www.gov.uk/government/publications/overseas-companies-and-limited-liability-partnerships-pg78).

          Reply
  2. Comment by Sarah Buttleman posted on

    When will the new Forms (TR1) be published and how are they accessed?

    Reply
  3. Comment by Ashia Adams posted on

    I have two questions please.

    1. Please confirm that all pending LR applications before 5 September 2022 will be dealt with before a restriction is placed on title and will not be subject to the restriction? (I note the transitional period disclosure requirements so such transactions will be disclosed as part of the application to register in the RoE).

    2. Should the Overseas Entities acquiring property on or after 5 September 2022 with bank financing (i.e. acquiring with debt) register the transfer and charge simultaneously once they have their ID?

    Thanks

    Reply
    • Replies to Ashia Adams>

      Comment by Pascal Lalande posted on

      Thank you for your questions, I'll respond in order:

      1 - where the overseas entity is an existing proprietor, an application lodged before 5 Sept will have priority over an application to enter a restriction. However, if the overseas entity remains the registered proprietor after the pending application has been completed (e.g. in the case of a grant of a lease), the restriction will be entered.
      2 - this scenario is explained within our updated Practice Guide 78 - see scenario 11.7. Please note that, to register the charge, the OE ID must be valid at the date the charge is granted.

      Reply
      • Replies to Pascal Lalande>

        Comment by Ashia Adams posted on

        thank you this is very helpful. One follow up. For property already owned by OEs, pelase confirm that all application lodged in the transitional period (i.e. before 31 January 2023) will be dealt with before the restriction kicks in.

        Thanks very much.

        Reply
        • Replies to Ashia Adams>

          Comment by Gavin Curry posted on

          Hello Ashia. If you submit an application before 1 February, the restriction will not impact that application regardless of when it is ultimately processed.

          Reply
  4. Comment by Alexandra Adams posted on

    Please confirm whether ECTEA will apply to a surrender (using form TR1) of a registrable lease (ie one that was originally granted for a term of over 7 years)?

    If so, would it mean that:
    (a) the overseas tenant who surrenders would need an OE ID?
    (b) the overseas landlord who 'receives' the surrendered lease would need an OE ID?

    Thank you

    Reply
    • Replies to Alexandra Adams>

      Comment by Pascal Lalande posted on

      A surrender is not a disposition within section 27(2)(a),(b)(i) or (f) of the Land Registration Act 2002 and so would not be caught by the overseas entity restrictions, provided it is clear from the TR1 that it is a surrender. In that case an OE ID would not be required for either party. However, if the TR1 was a transfer of the leasehold title (not a surrender) to the landlord then, to register the transfer, we would require:

      · where there is an overseas entity restriction on the register (that has taken effect), the OE ID for the overseas tenant or a certificate OE1 (see section 3.4.2 of Practice Guide 78), and
      · the OE ID for the overseas landlord (see section 3.4.1 of Practice Guide 78).

      Reply
  5. Comment by Ed C posted on

    Are overseas entities which complete a transaction before 5 September subject only to the requirement to register by 31 January in common with overseas entities holding UK land at 1 August? ie there is no earlier time at which they must register?

    Reply
    • Replies to Ed C>

      Comment by Gavin Curry posted on

      Applications to HM Land Registry received before 5 September will not require an OE ID.

      Reply
  6. Comment by T. K. posted on

    If the OE disposed a land in, say, 2020, is it still required to register to the land registry, or since that the disposal is already complete and the owner is now under someone else's name, it is their responsibility to register?

    Reply
    • Replies to T. K.>

      Comment by Gavin Curry posted on

      If the overseas entity is still shown on the register of title as being the owner of the property, despite having disposed of the property some time ago, they should contact the purchaser to establish why that remains the case. It may be that a problem has arisen with their application. If the circumstances are not clear the overseas entity should consider taking legal advice about whether they may be required to register at Companies House.

      Reply
  7. Comment by Alexander May posted on

    What will be the effect, if any, on a UK tenant of a new long lease granted during the transitional period by an overseas entity freeholder?

    Reply
  8. Comment by Roy Sweetland posted on

    My wife died recently. We owned our house in UK as tenants in common. I will continue to live in it.
    Part of her share is left to my son in her will, he lives in Canada at the moment. Does he as an individual have to register as an overseas entity.

    Reply
    • Replies to Roy Sweetland>

      Comment by Gavin Curry posted on

      Hello Roy. Private individuals who own property in their own name are not caught by the Economic Crime (Transparency and Enforcement) Act 2022.

      Reply
  9. Comment by Danielle Cooper posted on

    Presumably the OE ID requirement does not affect overseas entity mortgagees registered on UK titles?

    Reply
    • Replies to Danielle Cooper>

      Comment by Gavin Curry posted on

      Hello Danielle. You are correct - the OE ID requirement does not affect overseas entity mortgagees registered on UK titles.

      Reply
  10. Comment by Andrew posted on

    Hello

    I note there is a requirement to provide HMLR with the OE ID when an overseas entity buys, sells, transfers, leases or charges properties/land ('registrable transactions'), but I can't see a requirement to provide HMLR with the OE ID if the overseas entity is not undertaking a registrable transaction (i.e it simply continues to hold the legal title) - can you confirm if there is (or will be) such a requirement?

    Reply
    • Replies to Andrew>

      Comment by Gavin Curry posted on

      Hello Andrew

      There is no such requirement but an overseas entity may at any time inform us in a covering letter, or in the appropriate facility in our electronic services, of their overseas entity ID and we will enter it in the proprietorship register.

      Reply
  11. Comment by Natalie Case posted on

    If a lease is granted from the overseas Freeholder to the Tenant after 5th August but BEFORE 31 January 2023, will the Tenant require anything to deal with the restriction on the title?

    Reply
  12. Comment by Ghitt posted on

    We are an overseas entity who has owned the property for 10 yrs -we have contracted to sell the property to a UK entity. Are we required to register before we can complete the sale or can we complete the sale and the UK entity buyer apply for registration before Jan 2023?

    Reply

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