Foreign companies that own U.K. properties could soon be forced to reveal their owner or sell their assets within a year under a proposal detailed Wednesday. If they do not comply within the one-year transition period, they will be unable to sell or rent the home.
Additionally, those making a new purchase will have to hand over the name beforehand or the sale will be blocked under the proposed government rules to crack down on money laundering.
More:London Will See a Record Number of Unsold Completed Homes This Year
The U.K. government first unveiled its plans last May to become the first country to force foreign companies buying properties to reveal the name of their principal owner, and Wednesday published proposals of how it would work in practice in a consultation document that gives the industry a chance to offer their opinions.
Companies may be owned through a chain of companies with an ultimate controller at the top, or individuals may appoint a nominee to hold their shares so that they don’t appear on a shareholder register, according to the government.
"We intend to ensure that overseas entities cannot buy or sell property in the U.K. unless they have provided information about their beneficial owners for the new register," it said in a document published Wednesday.
As for entities that already own property, they will be given a transitional year in which they can choose whether to disclose the information or dispose of their property.
At the end of this one-year transition period, the government’s proposing that overseas entities will then be prohibited from selling the property or creating a long lease or legal charge over it if they have not complied with the new register requirements.
The idea is that these entities will be unable to realize fully the property’s value as they will not be able to sell it, rent it for a long period or use it as security for a loan if they are not compliant.
Some foreign entities may have no plans to sell, lease or mortgage their property so the government is considering whether to, in addition, make it a criminal offense to fail to provide information to the new register.
The government stressed that while legitimate foreign investment in the U.K. is welcome, overseas investors in the country’s property market have also included criminals laundering the proceeds of crime. The new rules would serve as a way to protect against this nefarious activity.
Since 2004, law enforcement investigations into international corruption have identified more than £180 million in U.K. property as suspected proceeds of corruption.
"We are committed to protecting the integrity and reputation of the U.K. property market and this register would be a valuable measure to increase transparency and investor confidence," Business Minister Margot James said.
"The extension of transparency requirements, which U.K. owners are already subject to, levels the playing field and means we would know who owns and controls U.K. property wherever they are from."
Donald Toon, director for economic crime at the National Crime Agency, said: "Greater transparency over the true ownership and control of U.K. property held in the name of overseas companies will make the U.K. a less attractive place to launder money and will assist investigators in tracking down and recover the proceeds of crime."
More:London’s Luxury Housing Market Sees Another Price Drop
The government added that it is planning to commission research looking at how the proposals might influence those looking to invest in the U.K., and what impact that might have on the country’s economy.