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Beneficial Ownership Of Overseas Entities Holding UK Property – Draft legislation published

The UK Government has published draft legislation to implement a new public beneficial ownership register for overseas entities of UK real estate, as part of its anti-corruption policy. It will go live in 2021 and will have direct consequences for the UK real estate market.

The proposed new rules follow the introduction in 2016 of the People with Significant Control (PSC) public register of beneficial owners of UK companies, and research conducted by the department for Business, Energy and Industrial Strategy (BEIS). This is a a further step towards creating transparency of ownership of UK assets by overseas legal entities.

The Draft Registration of Overseas Entities Bill (click here to see the document) is intended to force overseas entities owning UK property to name their ultimate owners on a public register or face criminal sanctions (prison sentences of up to five years) and unlimited fines if they try to sell or lease the property without first registering the beneficial owners. The rules would apply not just to overseas companies but to ‘any non-UK registered body with legal personality that can own property in its own right’.

From 2021 it will require overseas entities to register with, and provide details of their beneficial owners to Companies House before the overseas entity can be registered as the legal owner of UK land – whether commercial or residential.  The register will be publicly accessible.

The Government is inviting comments on various aspects of its draft Bill by 17 September 2018 and it is intended that the new rules will come into force in 2021.

For more information on this topic click here for a recent article by Katten Muchin Rosenman LLP. If you wish to know more about our Real Estate propositions our contact details can be found here.

Changes to the taxation of UK real estate held by non-UK residents

Nearly two thirds of real estate investors are concerned by the impact of changes to UK Capital Gains Tax (CGT) according to a report commissioned by Intertrust.

The Government has recently published its response to the consultation alongside draft legislation covering some but not all aspects of the changes to the UK taxation of capital gains realised by non-residents from disposals of UK property.

As part of the Autumn Budget on 22 November 2017, the UK Government announced significant changes to the UK taxation of capital gains realised by non-residents from direct and certain indirect disposals of UK property which will have effect from April 2019. The new rules have the potential to impact significantly on the UK tax liability of non-residents holding real estate.

There will now be a further technical consultation on the draft legislation and the Government’s proposals but it is not anticipated that the main proposals will be amended significantly before they are put in place.

It appears that the Government has listened to feedback from the initial consultation concerning various perceived problematic aspects of the original proposals but with less than a year before the implementation, non-resident investors in UK property should be considering the potential impact of these changes for their existing and planned investments and if it might be necessary to consider a restructuring of existing arrangements.

For more information on this topic click here for a recent article by Katten Muchin Rosenman LLP. If you wish to know more about our Real Estate propositions our contact details can be found here.

 

Managing Property – GDPR and Tenant Databases

If you manage property assets have you considered that GDPR will apply to the information you hold relating to tenants?

Typically you will use and store tenants’ personal information and so will be legally required to comply with GDPR and you need to process and control this information in a transparent fashion, which includes explaining:

  • What personal information you collect.
  • Why you need their personal information.
  • How you might use their personal information (including who the information might be shared with), and ensuring you only use it in that way (unless there are overriding legal precedents requiring the information).
  • How long their personal information is retained for.

On a positive note GDPR is actually a good opportunity to take a look at how you’re organising tenancy documents in general and to improve your processes, making them more efficient and you may wish to issue an updated privacy notice. For more information on this topic click here for a recent article by DAC Beachcroft solicitors.

It is important to remember there is a risk of significant fines and penalties for any firms falling victim to a data breach and after a data breach, you will need to contact the Information Commissioner’s Office (ICO) within 72 hours, and, you will need a rapid plan of action for communicating to customers, suppliers and employees.

You are likely to incur costs for a combination of IT forensic investigation, legal assistance, communication logistics and, public relations and whilst risk management will help to prevent a cyber attack, even the best security does not always prevent an intrusion.

In the event that an incident does occur, cyber insurance provides a valuable safety net. Click here to learn more about Cyber Insurance.

Liquidated damages in construction contracts

Liquidated damages are a pre-agreed amount of money that is set out in advance in the contract that fixes the sum payable as damages if the contractor breaches the contract – typically by failing to complete the construction works by the completion date set out in the contract. Liquidated damages are not penalties but rather they are preset damages agreed at the time that a contract is entered into and based on a calculation of the actual loss likely to be incurred if the contractor fails to meet the completion date. Typically they are calculated on a daily or weekly basis.

Clauses to include liquidated damages are commonly used in construction contracts as a solution to deal with specified breaches to make the recovery of damages easier and quicker.  Contracting parties are generally free to agree to whatever terms they like. However, the courts have refused to enforce liquidated damages which are deemed to be a penalty so it essential that sufficient care is taken before contracts are entered into to fully assess the potential costs of delays by the contractor while resisting the temptation to over-estimate them. Click here for an article by DAC Beachcroft about pitching damages at the right level.

General Data Protection Regulation (GDPR) – Are You Ready?

The General Data Protection Regulation (GDPR) and Data Protection Act 2018 replace existing data protection laws in May 2018.

How we use data in modern business practices has changed significantly since the late 90s so data regulation needed to change with the times.

GDPR gives additional rights for people in relation to the information that companies hold about them, obligations for better data management for businesses, and a new regime of fines if businesses don’t comply.

It will impact every single business that handles personal data.

Whilst the accountability for adoption and compliance usually sits with the management team, every customer-facing role in your business needs to be aware of the implications as the fines for breach are significant.

For more information click here for an article by DAC Beachcroft