Ownership register looms on the horizon
The property industry always seems to be on the countdown to something.
Whether it be changes to commercial property taxation due to Brexit (that’s another article in itself), the threat of being unable to rent out commercial property if it doesn’t meet higher EPC ratings (that’s coming soon, too) or the final chance to stock up on hangover cures before heading off to MIPIM.
One recent announcement by the Government is that a public register of ultimate owners of overseas entities holding interest in UK property will be released by early 2021.
Or to put it more simply, overseas property buyers won’t be able to hide who they are any longer.
Cleaning the laundry
The Government claims this register will provide greater transparency on overseas companies and therefore crackdown on criminals laundering dirty money through UK property.
It says some £180m worth of property in the UK has been brought under criminal investigation as the suspected proceeds of corruption since 2004.
Some 75% of these properties currently under investigation use off-shore corporate secrecy – a regular tactic of money laundering.
As a solicitor regularly advising on international transactions – Slater Heelis acted on more than £35m of property transactions in the past 18 months alone involving Hong Kong based investors or the Hong Kong community based in England – I speak from experience on how much anti money laundering training is given to UK property lawyers.
I also suggest that this register won’t have the devastating effect on the market that some naysayers are worried about.
UK property investment from Hong Kong alone is at record levels. Some £2.1bn was spent by Hong Kong investors in the first quarter of last year. UK property is appealing to overseas investors for all the right reasons, and not just a means to clean up dirty money. This won’t stop overnight.
However, as a solicitor, you would also expect me to say leave nothing to chance. We have three years to anticipate and prepare for the register to open.
• It is anticipated the register will follow similar lines to the Persons with Significant Control (PSC) public register used to disclose ultimate owners of UK companies
• No ‘Grandfathering’ is proposed – the Government is proposing a one-year timescale for existing structures to comply
• It is expected failure to comply will be a criminal offence and restrict the owner’s ability to sell or lease their property
A more positive outlook is to see the register allowing for more targeted punishments rather than blanket restrictions, which can only benefit the legally compliant and clean majority.
For anyone going to MIPIM, you only have a matter of days to stockpile the Rennies and painkillers.
For everyone involved in selling property to overseas investors, you have three years to have this register fixed on your horizon and seek advice from solicitors experienced in all types of overseas investment. It will save a lot of pain in the long run.
If you have overseas clients investing in UK property and want to discuss the ownership register or any other legal services surrounding investment purchases, please email email@example.com or call 0161 672 1440.
While there is no requirement for a seller/landlord of property in England and Wales to provide replies to pre-contract enquires raised by the buyer/tenant, failure to do so will...