Clause 4 - When title must be registered
Land Registration Bill [Lords]
10:45 am
Mr William Cash (Stone, Conservative)
We are now heading into much more contentious waters. In general terms, the amendments are designed to relieve small businesses, the agricultural community and some residential occupiers of the burden of registration for little, if any, benefit.
The Law Society's suggestion, which has already been traversed in the House of Lords, is that leases should be registrable only if they are for a term of at least 14 years instead of the seven years proposed in the Bill. This is a substantial issue. I know that the Minister has heard the arguments and has in front of him voluminous papers that will give us further opportunities to examine the question, if not at such fantastic length as is theoretically possible.
The case for lengthening the period is that it would reduce the number of leases that will have to be registered to no good purpose. Registration is carried out at the expense of the tenant, who pays both Land Registry and professional fees. Some of the leases in question would be of residential premises, adding to the cost of home ownership. The majority will probably be of business premises, and some will be of agricultural premises. The cost will become an overhead that adds nothing to the profitability or productivity of a business.
The three principal reasons for registering a lease are: to ensure that the tenant has a secure title; to facilitate transfers; and for public information. Under almost all short leases, tenants will be in possession themselves. That protects their title adequately so that registration is unnecessary on that account. The shorter the lease, the less likely it is that it will be transferred during its lifetime. Certainly, some leases of seven to 14 years' length will be transferred, but their number will not be great enough to justify the expense of registering them all.
Most commercial leases contain five-yearly rent reviews, so leases are commonly five, 10, 15, 20 or 25 years in length. At present, only 25-year leases need to be registered. The obligation to register leases of 14 years would catch the other substantial terms of 15 and 20 years, which was the reason for selecting it. The longer the lease, the more likely it is to be transferred and the more likely it is that the benefits of registration would outweigh the burdens.
The only substantial public information reason for registration appears to be to give information for rent reviews. That is misleading. On a rent review, the comparative data used as evidence are known as ''comparables'', and it is important that the other transactions cited do indeed bear comparison. An important factor is the security of tenure that the tenant enjoys. The information that rent reviews in seven-year leases use would be available for reviews under much longer leases. However, the disparity between the lengths of the leases would seriously reduce their value as comparables. In addition, other terms of the lease must be equivalent in such matters as repair obligations and restrictions on use. That information is contained in the lease and when a lease is registered a copy is lodged with the registry, but it is not made public. Registration would not ensure that the available information on rent and length of term would be useful.
The Bill contains powers to reduce the term of registrable leases, and we would suggest proceeding by a stepped reduction from the current 21-year period to a 14-year period. In future, perhaps when electronic conveyancing is familiar to most conveyancers, that figure should be reduced to seven years. That would allow the impact on the Land Registry and the commercial property market to be felt before moving, probably irreversibly, down to the short term proposed by the Government.