Enjoy this article courtesy of STEP:
The UK government has published its plans for a public register of the beneficial owners of UK properties held by overseas entities.
This register will be the first of its kind in the world, according to Margot James, Parliamentary Under Secretary of State at the Department for Business, Energy and Industrial Strategy.
The government first announced its proposal in May 2016, and it has now reached the detailed implementation stage. The Department for Business, Energy and Industrial Strategy (BEIS) suggests that the proposals should apply to both existing and new owners.
‘Beneficial ownership of property’ would have a similar definition as the ‘person with significant control’ criterion in the company ownership register. It would include persons who have the right to exercise significant influence or control over a trust or firm that is not a legal entity.
Existing foreign property owners would have one year to declare their ownership to Companies House, which would hold the register and make it freely accessible to the public – as it already does with its register of beneficial ownership of companies. Overseas entities planning to buy UK property will first have to register their beneficial ownership information with Companies House. In either case the register would have to be updated every two years. Non-compliance with this requirement may constitute a criminal offence, although this is not yet definite.
Information recorded on the public register of foreign ownership of UK property will display the individual’s name, year and month of birth, nationality, country of residence, a service address, the nature of their control over the company, and the date on which they gained that control. Individual owners will be able to apply to have certain personal information withheld from public view, as the BEIS paper promises a ‘thorough protection regime to protect people who are at risk of harm as a result of information about them being publicly accessible’.
‘We will ensure that all legal entities affected by the changes are informed and made aware of the new requirements in good time’, says the BEIS paper. ‘This will include working with international partners to raise awareness about the register with legal entities considering investing in the UK.’
Chris Groves, of law firm Withers LLP, says that there is significant doubt about whether the proposed register can achieve its stated goal. ‘Registers like [this] are rarely able to prevent fraud because their introduction simply changes the way in which the truth is obscured’, he said.
Moreover, he said, public registers can have ‘accidental victims’ who may be put at risk by having their personal details disclosed. ‘There is certainly a strong argument for government agencies to have this information in order to prevent fraud’, said Groves. ‘But where is the argument for this information to be made publicly accessible and needlessly put people at risk?’