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Register of Overseas Entities and implications for real estate

On 1 August 2022, the new Register of Overseas Entities (ROE), held by Companies House, came into force through the Economic Crime (Transparency and Enforcement) Act 2022 ('the Act').

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26/08/2022 · 3-minute read

On 1 August 2022, the new Register of Overseas Entities (ROE), held by Companies House, came into force through the Economic Crime (Transparency and Enforcement) Act 2022 ('the Act'). Overseas entities who want to buy, sell, or transfer property in the UK now need to be registered in the ROE.

On or after 5 September 2022, an overseas entity, which acquires property, will not be able to register an acquisition at the Land Registry if it is not registered in the ROE. Additionally, failure to comply with the Act could lead to a fine of up to £2,500 per day or a prison sentence of up to five years.

An overseas entity is any body corporate, partnership, or other entity that is not governed by UK law. The registration of the overseas entity will involve declaring the identity of its registrable beneficial owners or managing officers.

The Act is partly retrospective — requiring identification and registration of beneficial owners in relation to properties acquired by overseas companies during the last 20 years in England and Wales (eight years in Scotland). Failure to identify will lead to properties being frozen. These overseas entities will need to register with Companies House by 31 January 2023. 

Before registration is possible, an overseas entity will need to find a UK-regulated 'relevant person' to 'verify' the information. Estate agents and letting agents are relevant persons (pursuant to the money laundering regulations) and can verify the prescribed information, in line with statutory requirements. Those who work at, or work on behalf of the overseas entity may also complete the Register of Overseas Entities. However, government guidance highlights that it is 'quicker and easier for an overseas entity to be registered by the same UK- regulated agent that carried out its verification checks.'

This is a significant subject in itself but key considerations and suggested actions include:

  • Raise awareness. This alert may be shared with teams to ensure they are aware of the new requirements.
  • Ensure that new and current clients are warned of the registration requirements and the firm's position on verification and/or registration.
  • Identify live/recently completed transactions involving overseas entities. Establish whether the firm has received and can verify the beneficial ownership, and whether it is obliged to do so given the retainer.
  • Audit past transactions for current clients. Determine if prior transactions are caught by the legislation and whether your firm will contact the client and explain the impact (including whether or not you are happy to act and on what terms).
  • Train teams appropriately if providing verification services and/or registering and overseas entities.
  • Update and/or create new policies. New legislation often creates new sources of claims against professionals. Create procedures for identifying, assessing, and monitoring clients triggering these requirements so that prompt responses can be given. Firms may want to consider restricting who can verify and/or require a four eyes check on verifications provided for clients while the process becomes more embedded and understood.
  • Create a record of the processes undertaken leading up to verification. Remember that the process may vary in complexity depending on the scenario.
  • Understand the insurance implications. Fines and penalties against the firm or individuals are excluded from many policies. Additionally, insurers are likely to request information in relation to relevant clients and activities.

Meet the authors

John Kunzler

John Kunzler

Managing Director

Victoria Prescott

Victoria Prescott

Senior Vice President

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