Economic Crime Bill what it means for real estate

Last week the government published the Economic Crimes (Transparency and Enforcement) Bill. The bill is expected to become law later this month and will have a significant impact on the process of acquiring or disposing of land in the UK by foreign entities.

The Economic Crimes (Transparency and Enforcement) Bill (the Bill) was released last week directly in response to the war in Ukraine, but it addresses long-standing concerns and plans to crack down on foreign investment hidden in the UK as part of the government’s strategy. to crack down on overseas criminals who use UK assets to launder money.

There are already 27 pages of amendments tabled and so, while we have a good understanding of the effect of the legislation, its final details will not be known until the parliamentary process is complete.

Overview

The bill applies to ‘overseas entities’ which are legal entities governed by the law of a country or territory outside the UK, and therefore includes entities incorporated in the islands Channel Islands and the Isle of Man.

It establishes a new register of foreign entities at Companies House and requires foreign entities owning or acquiring certain interests in UK land to register and provide details of their beneficial ownership to Companies House.

This registration process will need to be completed before any transfer or lease of land can be registered in the name of a foreign entity at the HM Land Registry, and before most disposals of land by foreign entities.

To deal with existing land ownership, HM Land Registry will be required to place a restriction on the title to any land registered in the name of an overseas entity and which has been acquired since 1 January 1999. This restriction will prevent the registration of any transfer, lease or encumbrance on this land unless the formalities for registration at Companies House have been completed.

Similar provisions apply in England, Wales, Northern Ireland and Scotland and criminal penalties will apply to any foreign entity that fails to comply with its registration requirements with Companies House.

Hourly

The Bill is pending in Parliament and is expected to be passed in the House of Commons today. There is no timetable yet for its passage through the House of Lords, but we can anticipate that it will happen very quickly and that the bill could be passed as early as mid-March. Once it receives Royal Assent, it will come into force on a date specified by regulation.

The actual timing and implementation of the bill will likely depend on Companies House putting in place the procedures and infrastructure for the new register and for the new identity verification requirements that are being introduced.

About Lillian Coomer

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