by Chris Coombe and Howel Lewis
The removal of the curtain of secrecy which, until now, has surrounded title registers offers a number of opportunities for developers and others involved in the business of real estate. Those who provide advice on property matters now have the chance to offer their clients all the information which is available on a register at the cost of an application to the Land Registry and payment of an £18 fee.
For those who may not have seen John Pryer’s article outlining the new land registration provisions(*), a few general points need to be repeated. Although it is usual to talk about “registered land” it is titles in land, rather than the land itself, which are registered. If the owner of a freehold title grants a 99-year lease, there will be one register for the freehold title and another for the leasehold title. Each register is divided into three parts: the property register, the proprietorship register and the charges register.
The property register contains a description of the land by reference to a filed plan based on the Ordnance Survey Map, together with details of any rights and easements benefiting the land and, in the case of a leasehold title, brief particulars of the lease under which the property is held, including the amount of the initial rent.
The proprietorship register contains the name and address of the registered proprietor, the class of title which he enjoys (absolute, good leasehold, qualified or possessory) and any restrictions on the registered proprietor’s right to deal with his interest. The practice of showing the price paid on purchase was discontinued in 1976.
The charges register contains details of mortgages, charges and other matters adversely affecting the registered proprietor’s interest, such as restrictive covenants, leases granted for more than 21 years and rights of occupation under the Matrimonial Homes Act.
Limitations
The opening of the Land Register does not make available a complete record of land ownership in England and Wales. Registration of title has been introduced in piecemeal fashion. Compulsory registration of title came to the City of London on July 1 1902, but was not, for example, introduced to large parts of Cumbria until December 1 1987. Even after compulsory registration reaches an area, it is only after a freehold sale or the grant of a lease of more than 21 years or the assignment of a lease with more than 21 years to run that registration of title is compulsory. According to the Land Registry, approximately 13m titles have already been registered, but a further 9m still remain unregistered. Much of the property owned by the large estates remains unregistered because there has never been a transaction triggering first registration. If land is unregistered there is still no requirement for a landowner to produce his deeds.
The right to obtain copies of documents referred to in the register also excludes charges and leases. Mr Pryer says that the right to obtain copies of charges was excluded because of the strength of opinion against making such financially sensitive information available. Copy leases, he says, are not made available because anyone interested “usually has ready access to them”. One might question this: comparable lease information is useful for rent review negotiators, who will have to continue to obtain their information in the market-place.
Mr Pryer has said that “whenever difficulty does arise, the Land Registry will consider providing a copy”, but presumably this concession is not likely to be granted to those who want information only for commercial reasons but who have no direct interest in the property comprised in the registered lease.
Advantages
Access to the register should be invaluable in a variety of circumstances.
Purchasers
For a prospective purchaser, it will be a simple matter to obtain details of the vendor’s registered title to confirm that the person with whom he is negotiating is indeed the registered proprietor. The vendor will not be able to conceal defects in title until a time when the purchaser is too committed to withdraw without inconvenience and expense. Where there is a boundary dispute it will often be useful to inspect the register of a neighbouring property to see whether the disputed land is included in that title. A search of adjoining land will also make it easier to identify rights of way, drainage rights and other easements.
Developers
Prospective developers, who wish to assemble a site, will be able to identify the owners of all registered plots of land including the owners of long-leasehold interests. It will be possible to map out the site completely, picking up pathways, odd corners and all the boundaries, which are often elusive and inconvenient when planning a development project. Developers will also be able to discover whether the site is subject, either wholly or in part, to inconvenient restrictive covenants or easements which would inhibit or make impossible the proposed development.
On the other hand, as a developer himself acquires and registers his own title to parts of the site, adjoining owners who search the register will be able to discover the extent of his land holdings and thus enter negotiations, fully alerted to the value of their own properties. As a defensive measure, prospective developers (and others) may prefer to buy land in the names of nominees, a ploy used for some time at auction sales. One may expect some interesting negotiations between landowners and developers each armed with all this information.
Nominee companies have been mentioned in the context of owners who do not wish to be identified. The use of nominees is generally, but not invariably, tax neutral. Also, from next year, another incidental benefit could flow if a property is owned through a company (eg 123 High Street, Anytown Ltd). Stamp duty is levied at 1% on the transfer of land but when the new sharedealing system is introduced, the transfer of shares will not bear stamp duty at all. So an owner might prefer to sell the company, not the land.
Tenants
The reluctance of landlords to identify themselves, or to deduce title, can be a matter of great inconvenience. For example, a tenant may need to know who his landlord is or to see his landlord’s title when attempting to assign his lease. Some landlords have not been prepared to co-operate at all, others reluctantly. A tenant will be able to establish, without recourse to his landlord, that his existing lease has been validly granted and to discover any incumbrances, such as restrictive covenants, which are registered against a freehold title (and binding on him). He will not be able to obtain a copy of a superior lease as copies of leases are expressly excluded in section 112.
Covenants and planning
Registered titles show the restrictive covenants to which the land is subject, but do not indicate when the land has the benefit of covenants over adjoining land. A landowner may have the benefit of a covenant which he does not know about. He will now be able to find out if adjoining land is subject to covenants and check whether a neighbour is complying with them. This is likely to be of particular interest when unwanted buildings or unwanted extensions are being built or adjoining land is being put to unwelcome use. The ability to identify the owner of the land will also be helpful to planning authorities if enforcement notices need to be served. For those wishing to apply for planning permission a search of the registered titles in a development site may make it easier to identify those on whom notice of a planning application should be given under section 66 of the Town and Country Planning Act 1990 (formerly section 27 of the 1971 Act).
Where land is subject to a covenant and the owner wishes to find out if it is still enforceable, it will be useful to be able to obtain copies of the registers of adjoining and neighbouring properties. This will identify those who might have the benefit of the covenant. Better information can be given to insurers if a restrictive covenant indemnity policy is sought.
Litigation
One remedy available to successful litigants is to place a charging order on land owned by the defendant. Ultimately this enables the land to be sold and judgment to be realised. It will now be possible to identify land ownership, and obtain this remedy more easily. In the past a defendant could make the plaintiff’s task very difficult. Again, nominee ownership may be chosen by those keen to cover their tracks.
Market information
Searches of the register will also make it possible to compile information relating to land ownership in a particular locality and perhaps to construct a profile of the land holdings of a particular property company. The process may be time-consuming and expensive, as it will be necessary to make searches against a series of registered titles and in an active market information may become quickly out of date. Although the Land Registry maintains an index of proprietors’ names, containing lists of all titles registered in the name of a particular proprietor, inspection is permitted only in connection with criminal proceedings and certain receivership and insolvency proceedings.
Rent and rent review
The proprietorship register of a registered leasehold title shows the initial rent reserved by the lease. This may be of interest to those negotiating a new rent or a rent review for adjoining premises and to those marshalling evidence in connection with renewals under the Landlord and Tenant Act 1954. However, without a copy of the lease and the detailed plans which are attached to it, it may be difficult to translate a global rent into a rent per square foot without some knowledge of the building in question (the Land Registry filed plan is on a scale of 1/1250). The full package offered to the tenant in terms of rent-free periods, and contributions to fitting-out costs etc could also mean that the rent shown in the lease is not an accurate reflection of the deal which was actually negotiated. It should also be remembered that a lease is registerable with a separate title only if granted for a term in excess of 21 years.
Future developments
When the Land Registry has computerised all its records it should be possible to make inspections from desk-top terminals. This may lead to pressure for the Land Registry to become a source of information not just about matters of title but about property values generally.
The information currently held by the Land Registry on a title by title basis could be collated and reprocessed to provide a valuable guide to property values and the level of recent property activity in a particular area. When consulted about the present proposals to open the register some years ago, the National Consumer Council said: “It may be argued that this would be an invasion of privacy. We disagree. The citizen has a strong interest in being able to conduct his family life in private. This does not extend to secrecy over the ownership of land. The ownership, use and occupation of land have several public implications. The denial of public access to the Land Registry is a symptom of the obsession with unnecessary secrecy which pervades British society.” It may be that the process of opening the Land Registry is not over yet.
(*) Estates Gazette. December 1, p.35.
