What is the NSI Act and why should property people care?
If you buy or sell land in the UK, you probably didn’t expect national security to feature on your to-do list. But it does, and increasingly so.
The National Security and Investment Act 2021 (‘NSI Act’) came into force on 4 January 2022 and applies to deals done since 11 November 2020. While aimed at sectors sensitive to national security, it can also catch land transactions. The government can screen or ‘call-in’ — and if necessary intervene in — acquisitions of land it considers a ‘threat to national security’, a concept that is deliberately not defined. That deliberate vagueness is the point: the government wants to keep its options wide open. After more than three years in operation, we now have real-world examples of how those options are being used.
The basics: How the Act works
There are two routes into the system: mandatory notification and voluntary notification. And then there’s the government’s power to come looking for you even if you don’t notify at all.
Mandatory notification — the 17 sensitive sectors (soon to be more)
The NSI Act contains a mandatory obligation to notify the Investment Security Unit (‘ISU’) of acquisitions above 25% of entities operating in 17 sectors deemed sensitive to national security. A notifiable acquisition completed without approval is void — not voidable, void.
The current 17 sectors include: Advanced Materials, Advanced Robotics, Artificial Intelligence, Civil Nuclear, Communications, Computing Hardware, Critical Suppliers to Government, Cryptographic Authentication, Data Infrastructure, Defence, Energy, Military and Dual-Use, Quantum Technologies, Satellite and Space Technology, Suppliers to Emergency Services, Synthetic Biology, and Transport.
The sector list is about to change. In March 2026, the government published its response to a 12-week consultation, setting out how it plans to refine the mandatory sectors. Secondary legislation is expected later this year. The key changes for the property industry are:
Water becomes a new mandatory sector, focusing on major water companies and larger independent providers. For property practitioners, this has implications for transactions involving water infrastructure, treatment works, reservoirs and the land on which they sit. Semiconductors and Critical Minerals will each become standalone sectors separated from Advanced Materials, with enhanced definitions. Land used for semiconductor fabrication or mineral extraction, refinement or processing will take on added significance. Artificial Intelligence will be narrowed, removing ‘off-the-shelf’ AI systems from mandatory notification. Clarifying amendments will also be made to Communications, Critical Suppliers to Government, Data Infrastructure, Energy, and Suppliers to Emergency Services.
The direction of travel is towards both expansion (water, standalone semiconductors, standalone critical minerals) and precision (narrowing AI, clarifying other sectors). The sector list is not exclusive, and national security concerns could arise in any sector of the economy. As yet the food supply chain is not being considered for mandatory notification.
Voluntary notification — the route for land transactions
Land transactions do not need to be mandatorily notified, but they remain at risk of being ‘called in’ if the government thinks there could be a threat to national security. Buyers, sellers and owners of land may make a voluntary notification to the ISU to pre-clear a transaction. If cleared, the clearance cannot be reviewed unless false or misleading information was provided. Certainty.
The notification process — what happens and how long it takes
Following notification and acceptance of the form, the government has 30 days to decide whether to call in. If called in, the process takes another 30 to 75 days, ending with a decision to clear, impose conditions or unwind the deal. In 2024-25, it took on average 8 working days to acceptance and 29 statutory working days to decide whether to call in.
The call-in power — what happens if you don’t notify
The government can call in an acquisition within the earlier of 5 years of it occurring (on or after 12 November 2020) and 6 months of becoming aware of it. Critically, the decision is assessed against current national security risks, not those at the time of the transaction. If the geopolitical landscape shifts after you’ve done your deal, your completed transaction could look very different through the government’s lens. The government proactively monitors the market: in 2024-25, seven non-notified acquisitions were called in.
The three questions the government asks about your deal
Decisions are made on a case-by-case basis, considering three risk factors:
1. Target risk — what’s the land, and what’s near it?
For land, the Section 3 Statement says land is mainly expected to be of national security interest where it is, or is proximate to, a sensitive site — such as critical national infrastructure, military bases, government buildings, data centres, or water infrastructure. No definition of ‘near’ is given. The Secretary of State may also consider the intended use of the land and the cumulative effect of multiple acquisitions near sensitive locations.
2. Acquirer risk — who’s buying?
This is likely to be the biggest factor. The government will look at the buyer’s connections and affiliations. Ties to a state or organisation hostile to the UK will be considered — countries often cited include Russia, Belarus, China and Iran. The government will look through nominee and family arrangements and consider sanctions history. Importantly, it’s not just about foreign buyers: of the 56 acquisitions called in during 2024-25, 48% involved UK-associated acquirers, 32% Chinese-associated, and 20% US-associated.
3. Control risk — what power does the deal give?
With freehold ownership, control is absolute; with leasehold, it varies by terms. The Secretary of State may also consider control through financial instruments such as loans, options, conditional contracts, and secured lending.
The Act in numbers — The latest Annual Report
The fourth Annual Report (July 2025, covering April 2024 to March 2025) shows the regime’s growing reach: 1,143 notifications received (up 25%); 56 call-in notices issued (up from 41); 17 final orders (up from five); one acquisition ordered to unwind; and 60 offences of completing without approval were identified. The sectors drawing most scrutiny were Defence (36%), Military and Dual-Use (29%) and Advanced Materials (27%).
The sharp end: What’s actually happened — Key cases
Gardner Aerospace — conditions, not demolition (2022)
The first major final order (October 2022) involved Gardner Aerospace, where a Chinese state-owned fund sought to increase its shareholding above 25%. The Secretary of State imposed conditions including an HMG observer on the board, prohibition on sharing sensitive information, and security-cleared directors. The deal wasn’t torn up — workable conditions were imposed, and later varied to be less onerous.
L1T FM Holdings / LetterOne — Upp Broadband (2022)
The government ordered full divestment of a fibre broadband company whose ultimate beneficial owners were Russian nationals. The Court of Appeal upheld the order. For the property world: if you’ve completed a deal and the government later decides it’s a national security problem, it can make you sell.
Newport Wafer Fab (2022)
The government ordered Nexperia (a Dutch subsidiary of Chinese-owned Wingtech Technology) to divest its 86% holding in the UK’s largest semiconductor fabrication plant — a case all the more significant given the March 2026 announcement that semiconductors will become a standalone mandatory notification sector. In that case the Government found there was a risk to national security that related to:
- technology and know-how that could result from a potential reintroduction of compound semiconductor activities at the Newport site, and the potential for those activities to undermine UK capabilities; and
- the location of the site could facilitate access to technological expertise and know-how in the South Wales Cluster (“the Cluster”), and the links between the site and the Cluster may prevent the Cluster being engaged in future projects relevant to national security.
The second limb of the decision illustrates the effect of the NSI Act on property transactions. It can be inferred that given the activities of Newport Wafer Fab at the site there was seen to be a risk that other businesses in the vicinity may be prejudiced by its presence on the site either through the risk that intelligence may be more easily obtained or possibly also a risk that their businesses may be interfered with in some way. The consequence of those risks was that this would prevent businesses in the Cluster ‘being engaged in future projects relevant to national security’.
FTDI Holding — the courts speak (2024/2025)
FTDI Holding challenged a divestment order over a semiconductor company. The court confirmed that ‘awareness’ of a transaction requires the government to appreciate it might need investigation — not merely to know a deal happened — and that courts will not second-guess national security assessments entrusted to the government by Parliament. If ‘awareness’ therefore occurs sometime after knowledge of the deal, this will extend the call-in period.
The Grange-over-Sands Golf Course — the case that says it all
A Russian businessman and his daughter triggered national security concerns by seeking to buy a golf course in the Lake District for £800,000. The Grange-over-Sands Golf Club sits on the rail line to BAE Systems’ submarine shipyard at Barrow-in-Furness and the UK’s biggest nuclear waste site, Sellafield — the only public transport link to both facilities. The buyer, Yury Shamara, derived his wealth from the Ilsky oil refinery near Crimea — a major source of fuel for Russian forces since the 2022 invasion of Ukraine — and has been entangled with sanctions-hit entities involved in Russian crude smuggling. The attempted purchase prompted concerns in the Ministry of Defence and Cabinet Office that it was part of a pattern of Russian individuals buying land close to military sites across western Europe. The deal collapsed following government intervention and enquiries from the FT so no voluntary notification occurred.
This case is a textbook illustration of the Section 3 Statement’s three risk factors: a golf course proximate to critical national infrastructure (target risk); a buyer linked to sanctions-hit entities (acquirer risk); and an outright purchase giving complete control of the land (control risk).
(Source: “Russian oilman tried to buy golf course on railway to British nuclear site”, Financial Times, 24 April 2026)
What’s coming next — Future changes to watch
The March 2026 announcement is the most significant development since the Act’s launch. Key items to watch include: the secondary legislation expected later this year (property practitioners should be ready for new sectors — particularly water — to take effect at short notice); the evolving scope of ‘critical minerals’; a possible early review of the Section 3 Statement given the dramatic shift in the geopolitical landscape since 2022; and the developing focus on Outward Direct Investment, which may in certain situations constitute an acquisition under the Act.
What does this mean for your next deal?
Most property transactions will never cross paths with the Act. But if any of the following apply, you need to stop and think.
When to be alert
- The land is near a sensitive site — military bases, nuclear installations, data centres, communications infrastructure, ports, airports, government buildings, water treatment works, and the transport links serving them. ‘Near’ isn’t defined, so err on the side of caution.
- The land is or could be used for sensitive activities — including defence, energy, water, data infrastructure, transport, food supply, rare earth mineral extraction, and the manufacture of medicines.
- The buyer has connections to certain countries, sanctions, or hostile actors — the government will look through nominee and family arrangements, as the Grange-over-Sands case demonstrates.
- Cumulative acquisitions — a portfolio of sites near sensitive locations may concern the government even if each individual purchase looks benign.
- The land has infrastructure running through or over it — power lines, fibre optic cables, gas pipes, fuel pipes, major water mains, or is used for mining including sub-surface extraction.
What to do about it
Consider a voluntary notification. Once cleared, the transaction cannot be called in. Certainty.
The average time from receipt of a voluntary notification to acceptance is 8 working days, with 29 statutory working days to decide whether to call in. That’s time and cost, but set against a deal that might be unwound up to five years later, it’s a price worth paying.
Build NSI Act due diligence into your process. Check what sensitive sites are nearby, understand what activities take place on or around the land, vet the buyer, and factor in extra time and cost.
Lenders will expect it. Secured lenders are likely to want either a voluntary notification or enhanced due diligence where a risk is possible. Expect notification and clearance to be a condition precedent to any debt facility where risks are identified.
Sellers need to think about it too. They will not want any risk of a sale being unwound. The Grange-over-Sands case is a reminder that a willing seller may find their deal killed by the acquirer’s background.
The bigger picture — where we are now
Three years in, the NSI Act has moved from ‘something to keep an eye on’ to a real, operational part of the UK’s deal landscape. The government is increasingly willing to act — 17 final orders last year, up from five. The regime is expanding through the March 2026 reforms. Retrospective reach is real and upheld by the courts. Land transactions are firmly in scope, as the Grange-over-Sands incident puts beyond doubt. Even UK buyers can be caught. The government is watching even when you don’t notify. And the geopolitical context is getting worse, not better.
The best approach to take
You can’t rely on your own common sense on this. Only the government decides if a land transaction is a threat to national security. If it does, it could unwind it after it has happened or impose conditions that could be costly.
The mandatory sector list is now actively being expanded — water, standalone semiconductors, standalone critical minerals — and multiple other sectors are being refined. The government’s powers already extend well beyond the listed sectors. And as the Grange-over-Sands case shows, they extend to a golf course in the Lake District.
If in doubt, ask. Better yet, notify. The cost of a voluntary notification is modest compared with the cost of a deal being pulled apart years after completion. Or, the cost of not checking, or caring, who’s buying.
For further help, contact John Hiscock, Partner at Winckworth Sherwood LLP.