Beneficial ownership disclosure for UK land and properties: the next step in the march towards transparency?
The movement towards greater business transparency has continued to gather pace. With beneficial ownership disclosure in relation to UK companies becoming mandatory next year, the focus is now on extending transparency requirements to overseas investment in the UK.
As of June 2016, the UK will become the first major country to establish a publicly accessible central registry of company beneficial ownership and control. As David Cameron has pointed out, however, this regime will apply only in Britain and only to British companies: to tackle corruption effectively, data needs to be traceable from one country to another. The government will continue therefore to make the case for transparency with its international partners, including the Overseas Territories and Crown Dependencies.
£122 billion of property in England and Wales is owned by offshore companies and, according to Transparency International research, approximately three-quarters of properties whose owners are investigated for corruption are held through offshore companies. The UK government intends to consult on how best to make property ownership by foreign companies more transparent. In the meantime, it has asked the Land Registry to publish data on which foreign companies own which land and property titles in England and Wales. Some, including campaign group Global Witness, are calling for all companies (including those incorporated overseas) that own UK property to be required to tell the Land Registry who their beneficial owners are.
If a beneficial ownership disclosure regime were implemented at the Land Registry, careful consideration would need to be given to the mechanics. For example, would a buyer of a property be required to provide beneficial ownership information as a pre-condition to the Land Registry registering that buyer as the owner? Would owners of properties already on the register be required to provide the information and keep it up to date on an annual or rolling basis? What happens to properties whose owners cannot or will not disclose beneficial ownership?
With the UK hosting an Anti-Corruption Summit in London next year and considering insisting that any non-UK company wishing to bid on a contract with the UK government should also publicly state who really owns it, the UK will continue to be at the forefront of increased transparency. If beneficial ownership disclosure for all UK land and properties really is the next step in the transparency story, owners and their advisers will be paying close attention to how such a regime will work in practice.
Please contact Nick McVeigh if you have any further queries or would like advice on these issues.