New Bill sets out to record all foreign entity owners of UK property

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Properties in the UK owned through a foreign entity will soon need to register their beneficial ownership in a “Register of Overseas Entities” under the Economic Crime (Transparency and Enforcement) legislation currently going through Parliament.

The Government has just published the draft of the Economic Crime (Transparency and Enforcement) Bill together with a factsheet. The legislation will introduce a new register which will record all beneficial ownerships. It is thought the new register will have a significant impact on both residential and commercial property transactions in the UK.

Although the factsheet is applicable in England and Wales, the legislation is to apply across the UK, with some minor differences for Scotland and Northern Ireland.

As the Factsheet says, The ‘Register of Overseas Entities’ will:

• provide more information for law enforcement to help them to track down those using UK property as a money laundering vehicle
• require anonymous foreign owners of UK property to reveal their real identity to ensure criminals can’t hide behind secretive chains of shell companies
• level the playing field with property owned by UK companies, who already need to disclose their beneficial owners to Companies House
• impose sanctions for non-compliance, including restrictions on registering or disposing the title of the land
• apply retrospectively to property bought since January 1999 in England and Wales and since December 2014 in Scotland.

The Bill is designed to tackle “dirty money” in the UK property market and will go a long way in strengthening of powers of the Unexplained Wealth Orders. For the first time there will be a public register of the beneficial owners of overseas entities that own land in the UK. It will affect all foreign and UK property owners who hold their properties through overseas entities. The government estimates that this will affect around £170 billion worth of UK property which is currently held through overseas vehicles, a measure that will eventually affect thousands of investors.

The Register

The proposed register will involve all future acquisitions and interests in UK land, and also any overseas ownership in England and Wales acquired since 1 January 1999, while in Scotland that which was acquired since 2014.

To register, owners will be required to submit information about the overseas entity to Companies House. Informations such as details of ownership or when held by a company, details of incorporation, such a company’s beneficial owners and directors. There will also requirement inform companies house of any changes and keep the information in the register up-to-date.

A beneficial owner is any person who holds more than 25% of the shares or voting rights in an overseas company (either directly or indirectly), or someone who exercises significant control over the company.

A qualifying property for the register will be any freehold property, or a lease of greater than seven and an overseas entity is defined as any entity that is governed by the law of a country or territory outside the UK.

Once the information has been provided to Companies House for registration, the overseas entity will be provided with an “overseas entity ID” number. The information listed on the register will be publicly accessible, except in the case of personal details such as dates of birth and residential addresses.

Criminal offence

Failure to comply with the future registration legislation will result in restrictions on the ability to sell the property in question. Any dispose of a property identified as being held by an overseas entity would result in a breach of the law and may amount to a criminal offence punishable by up to five years in jail.

Companies House will be the registrant body for the scheme. Details were included in a White Paper published on 28 February 2022 which sets out plans to upgrade company registrations as well. This will include improved checks on identification for anyone setting up, running, owning or controlling a limited company in the UK.

The government says that the forthcoming legislation represents a significant step forward in the security and transparency around the ownership of UK property, as well as the tightening up on the transparency and identity of exactly who sets-up UK company registrations.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – New Bill sets out to record all foreign entity owners of UK property | LandlordZONE.

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West of England Landlord Expo Tuesday 17th May 2022

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Key members of the Property118 and Cotswold Barristers team are hoping to meet several of our regular readers and tax planning Clients at the West of England Landlord Expo on Tuesday 17th May 2022 as well as an anticipated 500+ other attendees.

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Buy-to-let investors spurn big cities for Milton Keynes

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Landlords are increasingly choosing to buy properties in secondary towns and cities rather than major city centres, new research shows.

The largest number of buy-to-let completions during 2021 was in Milton Keynes, up a whopping 667% compared to the previous year, according to Paragon Bank, whose data reveals that completions in Bristol were up by 300% and in Luton by 258%. As well as London and Manchester (300%), the top ten hotspots also included Plymouth (183%), Stoke (157%), Northampton (133%), Cardiff (70%) and Nottingham (64%).

Demand strong

Paragon Bank director of mortgages, Richard Rowntree, says landlord demand for city and town centre property was strong in 2021, with its analysis showing completions for house purchases increasing by 100% compared to the previous year. Landlords had been reacting to tenants’ desire to live in urban areas, but in smaller towns and cities.

“There appears to be one of, or a combination of, three factors that each of these locations share,” says Rowntree. “They are in commutable distance to a major city, they mostly have vibrant universities and they have healthy local economies.”

Paragon’s figures show a 95% increase in buy-to-let completions in the capital during 2021, with landlords concentrating acquisitions in Zones 2 and 3 as they balanced the requirement for yield, availability of property, and tenant demand.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Buy-to-let investors spurn big cities for Milton Keynes | LandlordZONE.

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Northern Ireland landlords avoid rent cut as tenant bill moves closer

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Northern Ireland politicians have voted to overturn a proposal that would have cut private rents in the country by 10%.

Assembly members were debating amendments to the Private Tenancies Bill, which aims to strengthen the rights of private tenants by restricting rent increases to only once a year, as well as ensuring private renters don’t have to pay more than one month’s deposit up front.

Rent freeze

Gerry Carroll MLA had called for the Bill to include allowing those tenants who have lived in a property for more than six months to get a 10% rent reduction for a year, followed by a rent freeze for three years. However, Communities Minister Deirdre Hargey urged MLAs not to support it after many failed to oppose it during a previous vote. She said it put the Bill at risk of failing.

Hargey added: “The amendment places a duty on my department to conduct a consultation on a rent reduction and rent freeze. That is in keeping with the spirit of the amendment that was passed by the Assembly at consideration stage. The consultation will result in a report that is to be produced and laid before the Assembly within six months of the Bill’s receiving Royal Assent.”

Local elections

A Landlords Association of Northern Ireland spokesman tells LandlordZONE that the vote was simply a piece of electioneering in the run-up to local elections. He adds: “We’re opposed to the fact that by not being allowed to take more than one month deposit it means foreign students who don’t have a guarantor, and who previously paid a three or four month deposit, will end up having to pay one year up front instead.”

The proposed law, which will also make it mandatory for private rental properties to be fitted with smoke and carbon monoxide detectors, as well as having mandatory electrical checks, will now go through its final stage before it can become law.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Northern Ireland landlords avoid rent cut as tenant bill moves closer | LandlordZONE.

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Gove sends housebuilders back to drawing board over cladding plans

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Levelling Up Secretary Michael Gove has rejected developers’ offer to remediate unsafe buildings while protecting leaseholders from escalating costs.

The building industry had suggested funding the remediation of fire safety defects in properties they had a role in developing above 11 metres, without drawing on the Building Safety Fund, and to offer refunds relating to buildings where money had already been handed out.

Unsafe cladding

In a letter to the Home Builders Federation, Gove said the proposal, “fell short of full and unconditional self-remediation that I and leaseholders will expect us to agree”. He added: “I am disappointed to see you have not proposed a funding solution to cover the full outstanding cost to remediate unsafe cladding on buildings 11-18m.”

Gove said developers must commit to full self-remediation of unsafe buildings without added conditions or qualifications and has given the sector until the end of the month to agree a fully funded plan. “If an agreement is not reached by the end of March, I have been clear that government will impose a solution in law and have taken powers to impose this solution through the Building Safety Bill.”

Principal residence

The government has already announced that portfolio landlords who own flats hit by the cladding scandal won’t be covered by the remediation fund; only those leaseholders who live in a property as their principal residence and accidental landlords – those who do not live in the property, but do not own any other residences – or who own only one other property are covered.

Gove added that another industry roundtable would meet at the end of March to finish discussions.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Gove sends housebuilders back to drawing board over cladding plans | LandlordZONE.

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Can I move into my HMO?

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Hi, I would appreciate some input on this idea. I have a 4 bed unlicensed HMO (does not require a licence). Cutting a long story short, I am getting to retirement age, so I decided to sell up.

I gave all tenants (all on statutory periodic) due notice.

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8 Ground rents trapped in a company structure?

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We have 8 ground rents trapped in a company structure where we wish to rationalise into one, the active Buy to Let company.

The Holding Company contains 2 Ground rents, a subsidiary and practically inactive Management Company contains 6 Ground Rents and one Subsidiary to the Holding Company a BTL active company with mortgage borrowing.

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UK house prices rising at their fastest rate since 2007

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The average house price has hit a new record high of £278,123, following the eighth successive month of growth.

Halifax’s latest House Price Index reports that prices are rising at their fastest rate since 2007, with growth up by 10.8%, adding £1,478 to the cost of the average home in February.

Seven UK areas are now seeing double-digit annual house price inflation. Wales is the strongest performing nation or region, with annual house price growth of 13.8%, pushing the average property price to £207,184. Meanwhile, the South West recorded growth of 13.4%, with by far the strongest quarterly growth (3.5%) of any region. Halifax says it’s notable that both areas benefit from an abundance of more rural, scenic living which has been in demand throughout the pandemic.

Upward trend

London remains the weakest performing area of the UK, although the capital continued its recent upward trend with annual house price inflation now standing at 5.4%, its strongest level since the end of 2020.

MD Russell Galley says average property values have risen by £38,709 (+16%) since February 2020 and over the last 12 months, gained on average £27,215 – the biggest one-year cash rise recorded in 39 years of the index’s history. He adds: “Lack of supply continues to underpin rising house prices, with recent industry surveys showing a dearth of new properties being listed, now a long-term trend.”

Galley says the war in Ukraine along with surging oil and gas prices and peaking inflation are all likely to impact on confidence and already stretched household incomes. “These factors are likely to weigh on buyer demand as the year progresses, with market activity likely to return to more normal levels and an easing of house price growth to be expected.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – UK house prices rising at their fastest rate since 2007 | LandlordZONE.

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Prevent Council Tax bills being charged for individual bedroom lets

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We have just come across a petition to ‘Prevent Council Tax bills being charged for individual bedroom lets.’ Click Here

Surprisingly, it’s been up and running for almost six months already.  At the time of writing

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Glasgow Council ejects landlords from Scottish Landlord Register

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Seven failing landlords have been struck from the landlord register in Scotland for a raft of safety issues.

The Health and Safety Executive found a potentially dangerous gas boiler after tenants at two properties in Paisley Road West, owned by Ejaz Ali, raised concerns, reports the Glasgow Times. The council told tenants a rent penalty notice had been issued and they were not obliged to pay the landlord, but Ali then wrongly told them the issue was sorted and payments should resume.

Landlord Cheryl Campbell, who owns four properties in Mercat Gate Court, on High Street and Walls Street, was removed after it emerged she owed a property management firm more than £60,000 for common repairs and had an outstanding council tax bill of almost £28,500. She also didn’t provide fire safety, building insurance and legionella risk paperwork.

Lack of heating

After a tenant of John Milton, who lets six properties in Glasgow, told the council there was no heating and hot water in his home, the landlord failed to fix the problem. The council then discovered that four of his six properties did not have energy performance certificates, while he did not provide fire and gas safety and carbon monoxide detector details.

Clarkston Developments Ltd, which owns 12 properties in Glasgow, was not able to provide fire safety, carbon monoxide detectors and legionella risk assessment paperwork. A company representative accepted there were “serious question marks” but said the firm took its responsibilities seriously and was working on getting all the documents.

Safety certificates

James Duffy, who owns 29 properties across the city, failed to provide safety certificates for 12 flats in Ibrox and Cessnock. A council officer said Duffy claimed the properties had either been sold or were being repossessed, but checks found eight of the 12 were owned by the landlord and let to tenants. 

Rasham Singh, who owns a flat in Harley Street, was struck off after failing to provide a number of certificates, along with Mohammad Nawaz.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Glasgow Council ejects landlords from Scottish Landlord Register | LandlordZONE.

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