Who owns land? Open the books

Who owns land? Open the books!

By Robert Bau

Seeing a name on the land registry might suggest that person owns the property. In reality, the legal position is more complex and differs across the UK.

In England, Wales and Northern Ireland, the law makes a distinction between two types of ownership: legal ownership and beneficial ownership. The Land Registry records the legal owner, known as the “registered proprietor”. This is the person with the legal right to sell, mortgage or otherwise deal with the property. However, this register does not show who actually benefits from the property financially.

The beneficial owner is the person or organisation who enjoys the benefits of the property. This may include living in the property, receiving rental income, or getting the proceeds if the property is sold. So, the beneficial owner is not always the same as the legal owner.

This split exists because property can be held under a trust. In these arrangements, the legal owner holds the property on behalf of one or more beneficiaries. These beneficiaries have rights to the value or income of the property. Beneficial interests can be shared in different proportions and may arise through formal agreements, such as a written trust, or through contributions to the purchase price.

Separation

In contrast, Scotland operates a different legal system. It does not recognise the same separation between legal and beneficial ownership. Trusts do exist in Scotland, but they work differently. Trustees hold the property as legal owners, while beneficiaries have rights to benefit from it rather than a separate ownership interest in the land itself.

Transparency over who owns what has increased in recent years, particularly to tackle financial crime. Overseas companies that own UK property must now register their beneficial owners through the Register of Overseas Entities, introduced in 2022. Trusts that hold property often need to be reported to HMRC through the Trust Registration Service, although this information is usually not available to the public.

Early evidence suggested that compliance with these transparency rules was mixed. A significant number of overseas property owners failed to register on time, leaving many properties effectively anonymously owned.

Companies House enforces the Register of Overseas Entities (ROE) using a range of measures. These include warning notices, financial penalties and, in serious cases, criminal sanctions. The most effective tool is practical: entities that do not comply can be blocked from buying, selling or mortgaging property, making it very difficult to use their assets. Together, these measures make non-compliance difficult but not impossible and of course everything is dependent on the will to enforce.

Let’s be clear, there is no rational reason, apart from tax avoidance or financial engineering, to allow the beneficial owner to remain hidden and not to register. So, the law in England, Wales and Northern Ireland should mirror that in Scotland. Alongside this, all trusts should be registered and this register made public. The law and enforcement around the ROE should be strengthened, making it impossible for a property owned by an overseas person or entity to remain hidden.

The old demand of “open the books” applies just as much for property as company financial records.