I am mindful that several noble Lords, including the noble Baroness, Lady Chapman of Darlington, and the noble Lords, Lord Fox and Lord Sikka, have tabled a number of amendments in this group. I will start with Amendment 34 in the name of the noble Lord, Lord Foulkes, who I see is not in his place. I will speak to it alongside Amendments 58 and 67 tabled by the noble Lord, Lord Sikka, as they cover the same subject of retrospectivity and the subject the noble Baroness, Lady Jones, raised earlier.
These amendments seek to extend the scope of the definition of overseas entities registered as the proprietor of a relevant interest in land by removing the registration dates currently stated in the Bill. This has obviously been an area of interest in both Houses. The Government, of course, agree that the register should be as comprehensive as possible. However, there is no benefit to be gained from removing the dates as suggested, as I explained to the noble Baroness, Lady Jones, earlier. Doing so would instead create legal uncertainty. Due to the way information was collected prior to those dates, the land registries would have no way of reliably and consistently identifying properties owned by overseas entities and those that are not. It was not compulsory in England and Wales, for example, to register the jurisdiction of ownership before 1 January 1999. As such, the Land Registry would have this information only where the overseas entity had voluntarily supplied the information itself.
The amendment would result in inconsistent application, as the information needed to enter restrictions on disposition on to relevant titles is not readily available before these dates. They were not just dreamt up arbitrarily; these dates are put in for good reason. The result of removing the reference to the registration dates would be that only those entities that could be identified as being overseas entities could be brought properly into scope. Others that could not be so identified would not be.
This situation would also introduce significant uncertainty for buyers. There would be no way of providing absolute legal certainty as to whether an entity should or should not be in scope for those properties registered before 1999 in England and Wales, and before 2014 in Scotland. Third parties who were in the process of or considering purchasing a piece of land in the UK registered before those dates could not be sure whether they were engaging with an overseas entity that was in scope of the Bill, and which could become non-compliant at any time. The existing clauses are therefore essential for the register to be effective and operable, and to provide certainty as to which overseas entities are actually in scope of the requirement to register once the register goes live.
Finally, I remind the House that the agents who support property transactions are, as we have said earlier, all covered by the provisions of the anti-money laundering regulations. If there are properties with titles held by overseas entities going back further in time, when those entities next come to sell or lease those properties, the agents involved will be obliged to conduct appropriate checks for money laundering.
I turn now to Amendments 56, 57, 61, 62, 80 and 83 on the transition period. I thank the noble Baroness, Lady Chapman, and the noble Lords, Lord Fox and
Lord Sikka, for their amendments to shorten the transition period as proposed. Of course, as the noble Lord, Lord Fox, has just said, I am aware that speed of implementation of the register and of the transition period has been the focus of much debate in both Houses so far. The Government have already reduced the transition period from the initially proposed 18 months to six months.
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I have also tabled amendments, which I have just spoken to, to further ensure that there is no gap in coverage of overseas entities selling their property now. These amendments will require overseas entity sellers to declare beneficial ownership and provide information to Companies House if they sell at any time from 28 February this year, when the Bill was first published, up to the end of the transition period. I hope that this will alleviate concerns that criminals who are currently selling their property can get off scot-free.
This will be more effective than any further reduction in the transition period; first, because the shorter the transition period, the greater the risk that the provisions of the register might be challengeable under the European Convention on Human Rights, especially the right to enjoyment of property. Property owners who do not comply in time will have their property rights affected; that is quite a severe sanction and it is retrospective. The Government do not interfere with individuals’ rights lightly and this interference could not have been reasonably expected when rights over the properties within scope of the register were first acquired. This is a serious point. No doubt, those who wish to avoid these requirements and who are able to afford expensive legal teams will take advantage of any opportunity to do so. The legal risks are heightened because limitations in Land Registry data will not allow us to write in advance to all affected by the new requirements. Therefore, it is essential for legal reasons that we give owners reasonable time to register.
Secondly, in considering a shorter transition period, it is important to remember that the majority of properties held via overseas entities will be owned by entirely law-abiding businesses and people; this is a point that I have made a number of times. As I said earlier, we are talking about around 95,000 properties in England and Wales owned by some 30,000 overseas entities. Only a tiny fraction of these are likely to be held by criminal or corrupt interests. Many of the ultimate owners will be law-abiding British companies who have adopted these structures for legitimate commercial reasons. In some cases, complex chains of ownership may make it difficult to identify the beneficial owners if the timeframe given is too short. It is not the case that the managing officers of the entity itself will necessarily know, and they will need time to take legal advice and make any necessary enquiries. Others in scope of the new requirements will be British nationals who have adopted the arrangements for legitimate reasons of privacy; for instance, celebrities who do not want their addresses to be known publicly. These individuals may want to apply to Companies House for their personal details to be protected from public view on the new register, but the threshold for exemption
from the public register will be high, and it is right that individuals have time to seek advice on their options and how to make a case to the registrar.
To conclude, any legal challenge, whether brought by someone deliberately seeking to evade it or by a law-abiding organisation or individual unhappy with the time they have been given to comply, could jeopardise the implementation of the entire register. A balance must be struck between ensuring that there is no place to hide for corrupt elites and kleptocrats and allowing for the free enjoyment of property and maintaining the UK’s reputation as a stable investment environment. The six-month transition period, along with our proposed amendment to require sellers to declare beneficial ownership for disposals now, achieves this purpose. We believe that the register will have an immediate dissuasive effect and sends a strong message that the UK will not be a home for illicit wealth. However, implementation of this register is not essential to the UK placing effective sanctions on Russian nationals now. Other measures in this Bill will help us to do that.
The new register should be seen as a longer-term measure to help us to clean up our property market and will be a key tool for the NCA as it deploys more unexplained wealth orders in future. We have included it within this Bill as a message of intent, alongside measures that will have more immediate impact. I am acutely aware of the strength of feeling that this register is overdue and must be implemented as swiftly as possible. I can assure noble Lords that I share this wish. Companies House is readying a team right now and will move forward as soon as this Bill achieves Royal Assent. I also remind the House that what we collectively want to achieve is not just speedy but effective implementation. The six-month transition period, coupled with the new requirement to report disposals to Companies House where these have occurred since the publication of this Bill, will achieve this aim. I therefore hope that, in the light of that information, noble Lords will not press their amendments and that government amendments will be supported. I shall withdraw the government amendments now, but retable them on Report.
I move on to Amendment 97, tabled the noble Lord, Lord Fox. I am sure that the House can be in no doubt about the Government’s appetite to bring the register of overseas entities into force as quickly as possible. I can assure the House, as the Minister responsible, of my personal commitment to bringing the register into operation as quickly as possible. I commend the noble Lord’s enthusiasm to expedite it further, but I am afraid that I cannot agree to this amendment, because I do not believe that it would have the desired effect.
It is clear that compliance with Part 1 of the Bill cannot be achieved overnight, hence the need for there to be a transitional period within which overseas entities can take the necessary steps in that regard. Backdating the commencement of Part 1 to 1 March 2022 would defeat the point of the necessary transitional period. It is also important that industry has time to understand the changes to the new sanctions legal test and that we are able to engage on guidance before it comes into force. While the end of the Part 1 transition period will be the key date for compliance, Members
can draw reassurance from the fact that the requirements of the register clauses, in terms of information to be provided by overseas entities, encompass acquisitions of property and land that long predate the First Reading of this Bill, in some cases by decades. I therefore hope that the noble Lord will not press his amendment.
I thank my noble friend Lord Agnew for his Amendments 62A, 76A and 84A. These seek to prevent an overseas entity that makes a registrable disposition of property valued over £1 million during the transition period from accessing or removing the proceeds of their disposition from the UK for a period of six months. It would require that the money is held in a UK stakeholder account for that amount of time. I understand the spirit of this amendment, which is aimed at preventing the criminal minority from selling up and taking their assets out of the UK in the short term. However, I have already explained to the noble Lord personally, and to the House, how the transition period is in place to allow owners of property, who in the vast majority of cases are entirely law-abiding, to register or dispose of property before the registration becomes obligatory, and any restrictions on their property come into effect.
This amendment would have a disproportionate impact on legitimate owners and would also be difficult to justify in relation to interference with property rights. I have no doubt that those malingering entities that wish to avoid the requirements of the register and can afford expensive legal teams will take advantage of the legal risk that this poses. I have already tabled amendments to require overseas entities sellers to declare beneficial ownership and provide information to Companies House, if they sell at any time from 28 February this year up to the end of the transitional period. This is an appropriate and proportionate anti-avoidance measure imposed on those overseas entities selling properties before the end of the transitional period, ensuring that law enforcement will have the right information to pursue any subsequent investigation, if appropriate.
If a property has already been identified as belonging to a sanctioned person, there will already be a freeze on that asset. If it has not been so identified, but it later transpires that anyone involved in the transaction knew that they were or might be dealing with an asset linked with a sanctioned individual, all those involved in the transaction will have committed an offence and can be pursued by law enforcement.
In addition, my noble friend’s amendments as drafted are likely to cause legal uncertainty. The term “registrable disposition” carries legal significance in England, Wales and Northern Ireland but has no directly corresponding concept in Scotland. The amendment as drafted would therefore introduce a great deal of legal uncertainty in Scotland and may fail to achieve the desired legal effect. Also, the term “stakeholder account” is undefined by these amendments. While the intent could potentially be understood by the drafting that the account would belong to, say, a solicitor, I am afraid that there would be a great deal of legal uncertainty as to what qualifies as a stakeholder account. For these reasons, I hope my noble friend will understand that the Government cannot support these amendments.
Moving on to the fabled Amendment 92—