The government may create a criminal offence of failing to keep information on a register of overseas property owners up to date, according to proposals published today. The Department for Business, Energy and Industrial Strategy is setting out plans for what it says is the world's first public register of the beneficial owners of overseas-held properties and companies bidding for government contracts.
Under the proposals, existing owners will have a year to supply details to the register, which will be held by Companies House. Information will have to be updated at least once every two years; the government is 'considering making it an offence if entities fail to keep their information up- to-date'.
Plans for a register of oveseas owners of UK property were unveiled by the government in May 2016, in the aftermath of the Panama Papers revelations. A discussion paper entitled 'Enhancing transparency of beneficial ownership information of foreign companies undertaking certain economic activities in the UK' attracted 38 responses. According to the government the responses showed 'a very high degree of support for the general principle of requiring the information about the beneficial owners of overseas companies that own property'.
Today's document sets out some of the practical details of maintaining the database. It proposes that overseas entities wishing to buy property in the UK would first have to register their beneficial ownership information with Companies House, which would allocated a registration number for use to register title with the appropriate land registry.
Companies House would charge a fee for the service but would make the register available free to view.
Beneficial ownership would be defined in the same way as a 'person with significant control' under the Companies Act 2006, which sets criteria including directly or indirectly owning more than 25% of shares or voting rights in a company.
The public register would show: an individual’s name; their year and month of birth; their nationality; their country of usual residence; a service address; the nature of their control over the company; the date on which they became a person with significant control and if any restrictions are in place on disclosing any of the particulars.
The department says: 'We recognise that the introduction of this new register will be a significant change for overseas legal entities and how they interact with the UK property market and UK government procurement. We will ensure that all legal entities affected by the changes are informed and made aware of the new requirements in good time. This will include working with international partners to raise awareness about the register with legal entities considering investing in the UK.' It recommends that overseas legal entities consider applying to join the register before they enter the conveyancing process.
It states that on top of the benefits to transparency and law enforcement, the register 'should also support a better functioning property market. There are many cases where tenants do not know who truly owns the property they are renting, where neighbours struggle to identify who is responsible for repairs'.