REALWorld Law

Sale and purchase

Ownership restrictions

Are there any legal restrictions on foreign investors acquiring real estate?

UK - England and Wales UK - England and Wales

UK - England and Wales

Yes. The UK has recently toughened its rules on foreign investment, in line with other major economies. There are two important and recent pieces of legislation which affect foreign investment. 

The Economic Crime (Transparency and Enforcement) Act 2022 applies to all UK property. In broad, and simplified, terms, the Act prevents an overseas entity from:

  • selling, granting a lease of more than seven years or granting a legal charge; and/or
  • registering its purchase of a freehold or leasehold of more than seven years,

unless it has first become a registered overseas entity and complied with the updating requirements.  All overseas entities which already owned UK property were required to become registered overseas entities by 31 January 2023.  To become a registered overseas entity, the overseas entity must file information about itself, its managing officers and its beneficial owners (among other things) on the Register of Overseas Entities at Companies House.  Failure to comply with the Act will be a criminal offence punishable by significant fines or, in some cases, imprisonment. 

Additionally, the National Security and Investment Act 2021 applies to transactions entered into from 12 November 2020.  The Act introduces a mandatory and a voluntary notification regime for transactions which could affect national security, which relate to the acquisition of shares or assets and where a sensitive sector is involved (for example, defence).  The legislation could also cover the acquisition of land which is, or is proximate to, a sensitive site, such as a government building or site of national critical infrastructure.  However, little guidance has been given on the definitions of "proximate" or "sensitive".  The regime will also cover foreign to foreign transactions with a UK element (such as an acquisition by one foreign investor of a data storage company in another country, if that company performs services which may impact on national security in the UK).  Government approval would be required prior to completion of affected transactions and without it, the transaction would be void.