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Economic Crime Act – when does it bite?

The Government has announced the dates for implementation of the Economic Crime (Transparency and Enforcement) Act 2022. Overseas entities with prospective or existing land holdings in the UK must plan for the impact of the Act.

The Act implements plans to address hidden foreign investment in the UK as part of the government’s strategy to crack down on overseas criminals using UK property for money-laundering. We considered the terms of the Act in an earlier article and explained how it will affect overseas entities that own, acquire or dispose of land in the UK and also sellers, buyers, landlords, tenants and lenders who enter into transactions with those entities.

The government intends that the new Register of Overseas Entities (RoE) at Companies House will be launched from 1 August, also the commencement date for most provisions of the Act. However, it is expected that there will be a delay to the commencement of the land registration provisions of the Act with those taking effect on 5 September.

The introduction of the RoE on 1 August will trigger a six-month period in which all Overseas Entities with land ownership in the UK must register in the Register of Overseas Entities. Overseas Entities that owned land on 28 February 2022 but have subsequently disposed of it must also register.

A Land Registry restriction will be added to the registered titles of land owned by Overseas Entities which will prevent significant disposals of the land unless the entity is registered, or a limited exception applies. If the overseas entity was already registered (or in the course of registration at the Land Registry) on 1 August 2022, such a restriction will take effect on 1 February 2023. If the overseas entity made its application to be registered as owner of the land between 1 August 2022 and 4 September 2022, the Land Registry will add a restriction that will have immediate effect from the date it is added.

If the overseas entity acquires land on or after 5 September 2022, there will be an immediate restriction on disposals (regardless of the Land Registry adding a restriction to the title) unless the overseas entity is registered.

Overseas Entities currently negotiating the acquisition of land in the UK will benefit from the expected delay to the commencement of the land registration provisions of the Act because the requirement for registration in the RoE before an application to register an acquisition can be made at the Land Registry will not take effect until 5 September.

New Land Registry forms, and prescribed documents will be used to confirm the ID registration number of an Overseas Entity in the RoE, and compliance with the new restriction.

Overseas Entities should review recent and current acquisitions and ensure:

  • Land Registry applications have been submitted in relation to any completed acquisitions
  • Where possible, any pending acquisitions are completed, and the Land Registry application made, before 5 September 2022
  • Applications to register in the RoE are made from 1 August to avoid delays to Land Registry applications, and subsequent disposals

This article covers the position for England and Wales. The Act applies similar provisions across Northern Ireland and Scotland.

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2022.

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