Penningtons Manches Cooper LLP | Shakespeare Martineau
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Yes. Foreigners can own and occupy real estate and can hold shares in property owning companies. There are no restrictions on foreigners owning or occupying real estate. The UK government have confirmed, however, that they will establish (by early 2021) a public register of beneficial ownership of overseas legal entities that own or purchase property in the UK, or that participate in central government contracts. Overseas legal entities that fail to register necessary information about their beneficial owners will be prevented from dealing with UK property (buying, selling, granting a long lease and mortgaging it).
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
No. However, the UK Government maintains a list of individuals, organisations and governments that are subject to financial sanctions. Such individuals, organizations and governments would be subject to restrictions on lending and purchasing real estate.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
When buying it is usual to undertake conveyancing searches of the local authority, utility providers and property specific searches (such as mining). These are carried out before exchange of contracts and closing. There are also fees associated with estate agents, solicitors, valuation, surveys and professional advisors fees.
Value Added Tax (VAT) (a form of sales tax) may be payable on commercial real estate if the seller has waived the exemption to tax. Stamp Duty Land Tax is payable by the purchaser when buying real estate. HM Land Registry Fees are payable for registering the purchase following closing.
The amounts payable differ if the property is commercial, residential or a mixture of both.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner)?
Annual Tax on Enveloped Dwellings may be payable if the real estate is held by a company, a partnership with a corporate partner or a collective investment scheme. Business rates , designed to be paid by business occupiers are payable by property owners if the property is vacant.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so what are they?
Tax can be mitigated by using a tax efficient structure.
A foreigner who is not resident and who does not carry on a trade in the UK is only liable to pay basic rate income tax on rents received from investment real estate. A UK entity may be liable to higher rates of income tax.
Capital gains on disposals of commercial real estate held as an investment by a foreigner are generally not subject to tax.
The government are consulting on proposals to extend UK tax to gains realised by non-residents on the disposal of all types of UK real property, including gains on the disposal of commercial property in UK (currently, UK tax only extends to gains on residential property). Starting in April 2019, gains on the sale of UK real estate will be subject to UK tax at the prevailing corporation rates for corporate holders, and 20 percent for individuals and certain collective holding structures. There are also plans to tax non-residents when they dispose of interests in land-rich companies. Draft legislation, is expected in late summer 2018 with measures included in the Finance Bill 2019.
How is the ownership of Real Estate evidenced in your jurisdiction?
The ownership of real estate is evidenced by registration at HM Land Registry. This is a public register of titles and comprises over 80% of the land in England & Wales. Where the real estate is not registered, ownership is evidenced by possession of the title deeds.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
All documents referred to in HM Land Registry’s registers of title are subject to a general right of inspection. However, some documents or parts of them may contain prejudicial information and, upon application, can be designated exempt from public scrutiny.
Ownership of companies registered in England and Wales at Companies House is publicly available.