Public Register for Contracts Over Land – Consultation Ending

Many readers will be aware of the Government’s commitment to improving transparency about who owns and controls land in England & Wales. The Government believes that a lack of transparency could inhibit competition by encouraging land-banking and lead to local communities lacking visibility on who stands to benefit from land in their area being developed.

A Register of Overseas Entities was introduced in 2023 requiring overseas entities who own or lease land or property in the UK to register with Companies House and disclose information concerning their beneficial ownership and managing officers. Strict penalties are imposed for those in breach.

The next stage of the drive for transparency is the introduction of a public register of contractual controls over land in England & Wales, which will affect all those with the benefit of contracts for the purchase or promotion of development land. The scope of the proposal is not limited to large scale development and will apply to all contracts relating to land regardless of size and value.

The consultation on the proposal expires on 20 March 2024. Access to the consultation can be found here, and the draft regulations can be found here.

The results of the consultation are expected to be published later in 2024 with the provisions brought into force within the next 12 months.

The impact of the draft regulations can be summarised as follows:

 

Timing

Parties with the benefit of a contractual control over land must register details of that contract within 60 days of the date of the contract, any assignment and/or any variation of that contract.

The draft regulations indicate that the requirements will also apply retrospectively to all contracts entered after 1 April 2021.

 

Contracts to be registered

The regulations require details of any of the following contracts “which are intended to facilitate the future development” of land to be registered:

• Option agreements
• Pre-emption agreements
• Conditional contracts
• Promotion agreements

The regulations do not apply to unconditional contracts or contracts which are due to expire (without ability to extend) within 12 months of the contract being created.

 

Contractual Information to be Disclosed and made publicly available

The regulations require the following details to be registered in respect of each qualifying contract:  

• the full name of each party to the agreement and company/LLP registration number (where relevant)
• details of the type of contractual control agreement as referred to above
• the date of the agreement
• details of when the agreement will determine and details of any entitlement for the
• grantee to extend the agreement
• the title number(s) of the land affected by the contract and other information to allow the extent of the land to be identified

 

Exclusions

The regulations exclude contracts made for the purposes of national security or defence, and agreements made to facilitate and finance agreements will be exempt from the disclosure requirements. The meaning of “agreements made to facilitate and finance agreements” has not yet been published.

 

Enforcement

The draft regulations provide that the Land Registry will not permit registration of the Buyer’s usual protective entry against the title to the target land until the required contractual information is supplied.

The consultation also indicates that failing to provide the required information or knowingly or recklessly providing information that is false or misleading will amount to a criminal offence. Sanctions will include fines or imprisonment.

 

Delivery

The regulations envisage that the required information will be supplied by conveyancers via the Land Registry’s existing online portal. There is no indication that an additional registration fee may will be imposed.

 

Access

The regulations envisage the Land Registry keeping a central database of the disclosed, which will be publicly available. We anticipate that the nature of the access is likely to mean that property tech companies will principally access and disseminate the information via new or existing (paid for) platforms, although there may be scope for the data to be made directly available in formats which might be more user-friendly to individuals.

 

Comment

Whilst the drive for transparency is to be encouraged, we are concerned that the regulations may also have the following unwelcome consequences:  

• Impact on land values –the disclosed information may have either a positive or negative impact on land values by increasing competition or decreasing the desirability of the subject land or nearby land.
• Pressure on landowners - landowners may feel pressure by communities who are able to see that they are entering into agreements related to land in their area. This could lead to landowners being hesitant to bring land forward for development.
• Communities – the Government contend that greater transparency over control of land will stimulate earlier, constructive engagement between developers and communities, we are concerned about the risk that those so inclined will have more time to implement obstructive strategies and prepare objections during the planning process, potentially slowing the planning system even further. The Government argue that this is an inevitable consequence of better engaged and informed communities.
• Developers and others - developers and others may choose to opt into different types of arrangements with landowners to avoid providing information on contractual controls (although the scope of these available options is limited). There may also be moves to longer option agreements to reduce the risk of an agreement lapsing unintentionally.
  
  Developers, landowners, and promoters may also be concerned about publicly disclosing commercially sensitive details such as contractual expiry dates. This may prejudice the ability to extend or conclude transactions within those periods, and/or attract and encourage interest from interested third parties at the time of the expiry.
• Effect and Resource – many (including those we have spoken to) have doubts that the register will increase or quicken the delivery of development land and would rather that the Government divert its resources allocated to this initiative into the chronically under-funded planning system.

 

The Government is requesting consultation responses from those with an interest in the sector.

 

We intend to supply further updates in due course.