BUYING AND SELLING REAL ESTATE IN ENGLAND AND WALES 121
opportunity to negotiate the terms of the lease but will have to take it on its existing terms. An original tenant or a tenant who takes a transfer of a lease originally granted before 1 January 1996 is likely to have to remain liable under its terms for the remainder of the lease period, even though it subsequently transfers it to a new tenant, if there is a subsequent default. An original tenant or a tenant who takes a transfer of a lease granted on or after 1 January 1996 is likely to have to guarantee any new tenant to whom it transfers the lease for the period that that particular tenant remains the tenant, but its guarantee will cease if the new tenant later transfers the lease to another party. 7. Ownership structure The choice of ownership structure is often tax driven. We look at tax in the next section but here we focus on the non-tax facets of different types of ownership. Personal ownership / Directly held Advantages: Simple and cost effective. There is no structure to maintain and no annual running costs. Disadvantages: Details of land ownership are held on a central, searchable register at the Land Registry. If owned through a nominee (be they a corporate entity or trustees of a bare trust), only the nominee’s details appear on the title, but UK corporate nominees have had to disclose their ultimate beneficial owner on a separate public register (see below) since June 2016. This was extended to offshore corporate nominees in 2022, and these now must register as a trustee on HMRC’s Trust Registration Service (not public) and verify their beneficial owners through registration on the Register of Overseas Entities ( ROE ) (public). A UK Will and
UK Property and Financial Affairs Lasting Power of Attorney should be considered, to avoid a loss of control over the property in the event of death or incapacity. The asset will be exposed to claims from creditors and potentially also on divorce or relationship breakdown. Company registered in UK Advantages: Annual running costs are usually less than for offshore registered companies where corporate fiduciaries located in offshore jurisdictions often provide the directors. The company affords limited liability. Disadvantages: Since June 2016, those owning more than 25% of the ultimate beneficial ownership of a company must appear on a publicly searchable register held at the UK’s Companies House. Corporate governance documentation, such as company articles and possibly shareholders’ agreements, in addition to a Will (a UK Will may not be the most appropriate one in the circumstances) and a UK Property and Financial Affairs Lasting Power of Attorney, may be required in order to regulate who controls the company in the event of death, divorce or incapacity. The shares owned by the ultimate beneficial owner of the company will still be considered in the event of financial claims but pre-emption rights in the company’s articles may prevent the shares being transferred to satisfy creditors. Company registered offshore (i.e., outside UK) Advantages: Following the introduction of the ROE, it is hard to see any advantages over UK corporates. Disadvantages: Annual running costs can be high. Provisions requiring the disclosure of ultimate beneficial ownership, like the rules that apply to UK companies, were introduced in August 2022. As with a UK company, local corporate governance documentation and the most appropriate Will and a Power of Attorney
ILN Real Estate Group – Buying and Selling Real Estate Series
Made with FlippingBook Online newsletter