Proposed Transparency Measures for Trust Structures in UK Land Ownership

The UK government has launched a consultation on the proposed public disclosure of trust and beneficial ownership information where trusts are involved in UK land ownership structures. This consultation further advances the government’s current regimes of enhancing transparency, building upon the recent implementations of Registration of Overseas Entities and The Trust Registration Service.

Current Regimes

Currently the UK government has three main regimes relating to economic transparency:

• The Registration of Overseas Entities (ROE) – a recently established public register noted on UK Companies House, providing information about the beneficial owners of overseas entities that are registered proprietors of UK land.  
• The Trust Registration Service (TRS) – an obligation to file trust information with HMRC, applicable to both UK trusts and certain non-UK trusts. However, this information is typically not accessible to the public.
• The People with Significant Control (PSC) register – a public register on UK Companies House with information of the beneficial owners of UK companies and Limited Liability Partnerships.

At present, the public disclosure of beneficial ownership relating to trusts involved in UK land is not addressed in the current regimes. The government acknowledges this is a substantial gap in their ongoing initiatives to improve ownership transparency, particularly in relation to land ownership. This recognition highlights the necessity for the proposed consultation, which is scheduled to conclude on 21 February 2024.‍

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The Proposals

Firstly, and to be implemented irrespective of this consultation, the UK government has confirmed its intention to introduce regulations this year (as provided for by ECCTA). These regulations will enable applications for access to trust information held on the ROE which is presently not disclosed.

The ongoing consultation seeks opinions on whether this ROE trust information should be automatically accessible to the public, eliminating the need for applications.

The consultation puts forward three primary options:

1. Default Public Availability – all trust information on the ROE would be publicly accessible by default, excluding protected information.
2. Partial Default Public Availability – certain sensitive trust information, potentially details of beneficiaries, on the ROE would remain private.
3. No change – no change in publicly accessible information, with access to trust information granted to a third party only through application.
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Trust information in UK land ownership

The consultation expands its scope beyond the ROE, seeking input on enhancing transparency for trusts not affiliated with ROE entities. These changes could impact any trusts, whether onshore or offshore, and at any level in the land ownership structure.

The consultation proposes five key options for transparency:

1. Maintain current practices – uphold the existing approach without additional public disclosure for trusts (i.e., TRS and ROE, but without any new public disclosure for trusts).
2. Increased transparency for non-UK trusts – extend transparency principles to information held elsewhere, particularly for non-UK trusts owning UK land.
3. Minimum disclosure – publish only the essential trust information for public reassurance, keeping all other details private.
4. Minimum disclosure with legitimate interest test – release minimum information, with additional access subject to a ‘legitimate interest’ test, permitting access based on specific criteria.
5. Maximalist Approach – publish all information collected about trusts by default, embracing the highest level of transparency.

While the proposed changes are still in the early stages, the current inclination of the UK government is to address the specific loopholes in establishing an effective land ownership register. Trusts within ownership structures are currently identified as the primary loophole.

The exact details of these changes are not available, however it appears likely that the government will leverage the existing ROE and TRS to enhance transparency. Property investors utilising trusts in their ownership structures may want to ensure compliance with the current regimes. Additionally, they should consider the potential impact of these transparency measures on their existing structures.  
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Further considerations

The government recognises the delicate balance required between divulging information in the public interest and safeguarding personal data, the disclosure of which does not align with the overarching public interest principle.

Trust structures are prevalent in private wealth, and it is deemed appropriate to impose some limitations on the publication of details regarding individual trust beneficiaries, especially when minors are involved.

However, the expansive approach proposed at point 5 above would not only make vast amounts of currently private information public but also represents a significant departure from the established principle that the Register of Title maintained by HM Land Registry should solely reflect the legal ownership of a property without delving into the mechanics of legal ownership, so as not to complicate the conveyancing process.

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Summary

In summary, the consultation paper, accessible at: www.gov.uk/government/consultations/transparency-of-land-ownership-involving-trusts-consultation, presents several positive aspects and reflects the UK’s commitment to corporate transparency. The document addresses loopholes in existing regulations, seeking input on practical solutions. Although implementing any proposal will incur time and cost burdens for landowners, the trade-off is considered worthwhile for the benefits of a more transparent ownership recording system across the sector.

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