2023 is a busy year for commercial real estate law in the United Kingdom. There are many vital legislative changes on the horizon, but one that is grabbing the most attention is the Registration of Overseas Entities (ROE). The Act aims to combat economic crime and ensure legitimate businesses continue establishing the UK as an investment hub.
Introduced to help real estate owners maintain legal compliance and enhance their reputation, the ROE also significantly increases confidence among buyers and lenders by promoting transparency. For those unaware, the United Kingdom introduced a new ROE in August 2022 as a part of the government’s efforts to increase accountability in the ownership of foreign property in the region.
What do you need to know and why should you comply?
The ROE dictates that the register, which Companies House administers, requires foreign property owners to disclose their ownership and control information by 31 January 2023. It also includes disclosing the names of the beneficial owners and details of any individuals or entities with control over the property. Records will then be updated annually once entered into the register.
Before this Act, only UK-based companies used to disclose their owners on a public register. But now, the Act applies to all overseas entities who have purchased land or property on or after 1 January 1999 in Wales and England and from 8 December 2014 in Scotland. To avoid non-disclosure through a sale, the Act also applies retrospectively to properties or land sold in the UK on or after 28 February 2022.
Owners who fail to comply with the new regulations may face fines or penalties. The fines for failure to comply could range from £500 to £12,500, depending on the company’s size. Failure to comply with the register may also result in criminal sanctions and the seizing of the property. Therefore, real estate owners must act soon to ensure they comply with the new regulations to avoid any potential legal consequences.
How does the new system help real estate owners in the UK?
For starters, by disclosing ownership and control information, the register promotes transparency in the ownership of foreign property in the UK, which can help to prevent illicit activities such as money laundering or tax evasion. Complying with the new regulations ensures that real estate owners operate within the legal framework and can avoid fines or penalties for non-compliance.
The register’s transparency can help reduce the risk of fraud or money laundering. For real estate owners, this also helps enhance their reputations as responsible and compliant actors in the UK property market. Moreover, they may find it easier to access financing from banks and other lending institutions.
Complying with the new regulations may also increase the chances of future property sales, as more buyers will be willing to invest in properties registered with the new register, as it will be legally compliant.
However, the register is not limited to only those foreign companies that own property in the region but also those that own property through a subsidiary. Therefore, real estate owners must understand the new regulations and take action to ensure compliance as soon as possible.
In summary, real estate owners need to act soon to comply with the UK’s new Register of Overseas Entities to avoid fines and penalties, prevent the seizure of property, and maintain legal compliance.
Complying to UK’s new Register of Overseas Entities Act can be a daunting task for those who do not know much about it. It is important to get professional assistance for the same. At Healy Consultants Group PLC, we are happy to assist you with your business registration process in the United Kingdom.
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