We have lift-off - the new register of overseas entities holding UK land and property is now open for business!

Further to our previous article Action required NOW by all foreign companies and other overseas entities that own or acquire UK land and property, the commencement order for Part 1 of the Economic Crime (Transparency and Enforcement) Act 2022 has now been made. As of today (1 August 2022), the new Register of Overseas Entities (ROE) is now live and open for business!

The opening of the ROE does not yet oblige overseas entities to take any action. These obligations will kick in on 5 September 2022, although the 6 month ‘transitional period’ under the Act runs from today (not 5 September) and will therefore expire on 31 January 2023. But overseas entities that will be required to join the ROE in due course are now in a position to do so if they wish.

Since most overseas entities will not be able to apply to the Land Registry from 5 September to register a freehold interest or a lease exceeding seven years unless they are registered on the ROE at the time the application is made, any overseas entities that are likely to require such an application to the Land Registry are advised to submit their application to join the ROE now.

As a consequence of today’s commencement of the ROE, The Land Registration (Amendment) Rules 2022 also take effect today. All affected Land Registry prescribed forms (ADV1, AP1, AS1/3, CH1, FR1, TP1/2, TR1/2/5, plus the prescribed clauses for leases) have been amended to include provision for the ROE ID to be included for an overseas entity. Old forms can still be used for a further 15 months (ie until 31 October 2023), provided the ROE information is included where an overseas entity is involved.

Land Registry Practice Guide 78: overseas entities has also been republished today to reflect the ROE.  Appendix 3 includes multiple scenarios that help to understand how the new regime will work in practice.

The following obligations will kick in on 5 September 2022:

• overseas entities that already hold land (acquired since 1 January 1999) must apply to register on the ROE by 31 January 2023 (unless exempt)
• overseas entities cannot apply to Land Registry to register a freehold interest or a lease exceeding seven years unless they are registered on the ROE (or exempt) at the time the application is made
• when an overseas entity is registered as proprietor of a freehold interest or a lease exceeding seven years, a restriction will be added to the title preventing the future sale, letting or charging of the title unless the overseas entity is compliant or exempt at the time of the disposition (or one of the exceptions applies) – these restrictions will take immediate effect, and Practice Guide 78 confirms that after 5 September the Land Registry will also mop up any titles registered between 1 August and 5 September
• the Land Registry must enter a restriction on every existing registered title held by an overseas entity as at 1 August 2022 (that was acquired since 1 January 1999) – but these restrictions will not take effect until 1 February 2023
• it will be an offence for an overseas entity to make a disposition that is prohibited by a restriction on title relating to the ROE

The provisions of the Act relating to the annual updating duty, and removal from the register, are not covered by the commencement order and will presumably be introduced later.

And don’t forget that even if an overseas entity is not required to actually join the ROE (perhaps because it is no longer holding any qualifying registered titles by 31 January 2023), it may still be required to submit certain prescribed information by 31 January 2023 if it has made disposals between 28 February 2022 and 31 January 2023.