Acting on the Purchase and Sale of High-Value London Property Owned by Offshore Companies: What You Need to Know

High-value residential and commercial properties in London are often owned through offshore corporate structures. Whether for privacy, tax planning, or investment reasons, such ownership raises unique legal and compliance challenges when buying or selling these properties.

For clients looking to instruct a UK law firm on such a transaction, it is crucial to understand the regulatory framework within which a Solicitors Regulation Authority (SRA)-regulated law firm must operate and the practical issues that often arise.

Below we outline everything you need to know about what your solicitors are required to do, the common sticking points, and how they are typically resolved, along with how modern technology, including artificial intelligence (AI), is beginning to assist in streamlining this complex process.

Why Offshore Ownership Requires Special Care

Owning a London property via an offshore company, for example, in the British Virgin Islands, Jersey, Guernsey, Isle of Man, Cayman Islands or elsewhere, adds a layer of complexity. UK solicitors are subject to stringent Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) obligations when acting on such transactions. These aim to ensure that UK property is not used to launder illicit funds.

Accordingly, acting for a buyer or seller of such a property is not simply a matter of drafting contracts, it involves a rigorous compliance process that firms are legally obliged to follow.

What an SRA-Regulated Law Firm Must Do

When you instruct a UK firm, you should expect your solicitor to explain and carry out the following checks and procedures:

1. Client Due Diligence (CDD)

Firms must identify and verify the identity of the beneficial owner(s) of the offshore company. This includes:

• Obtaining a certified copy of the company’s Certificate of Incorporation and up-to-date company registers.
• Identifying and verifying the ultimate beneficial owner(s) (UBOs) who control or benefit from the company.
• Establishing the corporate structure if there are multiple layers of ownership.

2. Enhanced Due Diligence (EDD)

Because offshore ownership is considered a higher risk under the Money Laundering Regulations 2017, firms are required to perform enhanced due diligence. This typically means:

• Obtaining more detailed information about the company’s structure and purpose.
• Scrutinising the source of funds and wealth to a greater degree.
• Conducting more extensive checks on the UBOs, including screening against sanctions and politically exposed persons (PEPs) databases.

3. Source of Funds and Source of Wealth Checks

You will need to provide documentary evidence to show:

• Where the purchase money is coming from (source of funds) — e.g., from the sale of another property, investments, or business income.
• How the beneficial owners have acquired their wealth generally (source of wealth) — e.g., through a successful business career, inheritance, or long-term investments.

These checks often involve reviewing bank statements, trust deeds, investment portfolios, tax returns, and more.

4. Registration of Overseas Entities

Since 2022, overseas companies buying, selling, or transferring UK property must register with Companies House on the Register of Overseas Entities and disclose their beneficial owners before the transaction can complete. Solicitors typically assist clients in meeting this requirement.

Common Sticking Points and How They Are Resolved

Opaque Ownership Structures

Offshore entities sometimes use multiple layers of companies, nominees, and trusts, making it difficult to identify UBOs.

Solicitors will work with the client’s other advisers (e.g., accountants or trustees) to obtain notarised or certified documentation tracing through the entire structure. A delay here can often slow transactions significantly.

Reluctance to Disclose Wealth Information

Some clients are uncomfortable providing what they perceive as intrusive financial information.

Firms are legally required to obtain sufficient evidence — the transaction cannot proceed without it. Solicitors explain the legal obligations and work with clients to find acceptable forms of documentation while maintaining confidentiality.

Sanctions and PEP Concerns

If the UBO is a PEP or linked to a sanctioned jurisdiction, the firm must carry out additional checks, and in some cases decline to act.

Early disclosure by the client enables the firm to assess risks and advise whether the transaction is viable under UK law.

Delays in Registration of Overseas Entities

Registering with Companies House can take time, particularly if documentation is incomplete or inaccurate.

Begin this process as early as possible, ideally before marketing or exchanging contracts, to avoid delaying completion.

How AI Technology Can Help

Leading law firms are increasingly incorporating artificial intelligence (AI) into their compliance and transactional processes to improve efficiency, accuracy, and client experience.

Here are some of the ways AI can assist with high-value, offshore-structured property transactions:

Faster Document Review and Extraction

AI tools can rapidly analyse corporate documents, trust deeds, and registers to extract the key information about directors, shareholders, and beneficial owners,  saving time compared to manual review and reducing errors.

Enhanced AML Screening

AI-powered screening platforms can continuously monitor UBOs and connected parties against global sanctions, watchlists, and PEP databases, providing real-time alerts and more thorough checks than traditional manual systems.

Intelligent Source of Funds Analysis

AI can help analyse complex bank statements and investment portfolios to flag unusual patterns, verify claimed sources of wealth, and generate compliance-ready reports that meet regulatory expectations.

Predictive Risk Assessment

Some AI tools can assess the overall risk profile of the transaction based on factors such as jurisdiction, structure complexity, and transaction value, helping firms tailor their due diligence efforts proportionately.

How a Good Solicitor Adds Value

An experienced solicitor will not only guide you through the transaction itself but will also:

• Provide clear guidance on what documents and information are required.
• Liaise proactively with your other advisers to minimise delays.
• Manage the AML and compliance process efficiently to meet deadlines.
• Leverage the latest technology, where appropriate, to deliver a seamless service.

Final Thoughts

Buying or selling a high-value London property owned by an offshore company requires careful navigation of UK compliance obligations and practical challenges. Clients who are prepared to engage fully with their solicitors and provide the necessary information at the outset will avoid unnecessary delays and ensure a successful transaction.

If you are considering such a transaction, please contact us for an initial discussion — our specialist team has extensive experience in handling these complex and high value deals, and in using modern technology to deliver results efficiently.

📞 Contact us today to discuss whether we can help you.

Image credit: Image by Joe from Pixabay

This article is intended for general information only, applies to the law at the time of publication, is not specific to the facts of your case and is not intended to be a replacement for legal advice. It is recommended that specific professional advice is sought before relying on any of the information given. © Jonathan Lea Limited.