Government consultation on requirement for information about contractual controls on land

Summary 

The Government has launched a consultation on new regulations which will require the provision of certain information about agreements used to control registered land in England and Wales, intended to secure the land for residential, commercial or mixed-use development. The Government proposes that there will be a more transparent, publicly available data set of where and how land is under control, short of outright ownership. The regulations are expected to commence in April 2026 and will affect not only new agreements, but also existing agreements entered into from April 2021 and potentially earlier. There are criminal offences for failure to comply. 

Context

Part 11 of the Levelling Up and Regeneration Act 2023 contains a framework for the provision of information about interests and dealings in land, which is intended to facilitate greater transparency about “contractual control” agreements for England and Wales. Such agreements are used to control land (often in a development context) but short of outright ownership and examples include an option or pre-emption agreement. The Government perceives that such agreements sometimes act as a blocker to communities and SMEs securing land for development.

The Government (the Department for Levelling Up, Housing and Communities) proposes to deliver new regulations pursuant to the Act (which are being published in draft form), which seek to create a freely available data set comprising the “what”, “where”, “who” and “when” of contractual control agreements that are intended to secure land or property for residential, commercial or mixed-use development. The intention is that this will promote transparency by providing a reliable and accessible source of information for communities, developers and other stakeholders. 

Note that there is an inconsistency in the dates mentioned in the consultation document and in the draft regulations. The consultation refers to 6 April 2021 and 6 April 2026 while the regulations refer to 1 April 2021 and 1 April 2026.

The consultation and proposed data set

The Government launched a consultation Contractual controls on land: consultation - GOV.UK (www.gov.uk) on 24 January 2024 which seeks views on the proposed new data set and process for collecting the information. The consultation takes account of responses to a 2020 Call for Evidence on data on land control and seeks views on the time, cost, and market impact implications of collecting and publishing information about contractual control agreements. Responses to the consultation must be provided by 20 March 2024.

The Government’s concern is that while the contractual control agreements may be protected on registered titles, they are not currently recorded in an easily accessible or transparent way. There is also no legal requirement to record data on such agreements. 

The Government considers that the proposed data set will allow Prop Tech companies to create tools and applications that may reduce the time and cost of site identification and assessment by Local Planning Authorities and developers and help communities and local authorities to understand the likely path of development in their area.

Which agreements are in or out of scope?

For an agreement to be in scope, it must be in writing, relate to registered land and satisfy the following:

• It must be a new agreement, entered into after the commencement of the regulations (expected to be 6 April 2026); or an existing agreement, entered into after 6 April 2021; or an existing agreement entered into at any time which is varied to alter any of the required information or is assigned after the commencement of the regulations,
   
• It must be one of the 3 types of agreement mentioned below (and includes promotion agreements that include agreement of that type) and be intended to facilitate the future development of land and the agreement is held for the purpose of an “undertaking” (which includes businesses, charities and the exercise of public functions) - 
  • an option binding the registered proprietor to enter into a transfer, or to grant a lease for a term of more than seven years from the date of the grant, or
  • a contract binding the registered proprietor to enter into such a transfer or lease once specified conditions have been met, or
  • a contractual right of pre-emption or any other contract that prevents the registered proprietor from entering into such a transfer or lease, or which regulates the circumstances in which the proprietor can do so, and
     
• It must last for 12 or more months from (what the Government calls) the requirement arising, or if it does terminate within 12 months, include an entitlement for the grantee (the beneficiary of the agreement) to extend the agreement. 

Out of scope are:

• agreements made for the purposes of ‘national security’ or defence,
   
• agreements made to facilitate finance and loan agreements,
   
• restrictive covenants, and 
   
• overage and clawback agreements.

Which information from the agreements is intended to be collected and published?

The Government says that the information that it seeks is not overly commercially sensitive. The information required to be provided will be:

• Agreement type e.g. an option agreement
   
• Names of the contracting parties
   
• The date that the agreement was entered into
   
• Is there a fixed start date different from the date of the agreement?
   
• The day that the agreement will expire (or be capable of termination) and not be unilaterally extendable 
   
• Details of any entitlement for the grantee to extend the agreement and the ultimate long stop date
   
• The territorial extent of the agreement e.g. if it doesn’t extend to the whole of a registered title, describing how far it extends
   
• Land Registry title numbers
   
• SRA numbers for solicitors involved in the agreement (this information is not published).

Process for providing the information about future contractual controls

The grantee of a new contractual control agreement from the date of commencement will be required to provide information within 60 days of the agreement being entered into. Where it applies for a notice or restriction at the Land Registry to protect their interests and/or rights in respect of the agreement, it will be required to provide the required information about their agreement before it can register the notice or restriction. If it does not register a notice or restriction, it will still be required to provide the information to the Land Registry within 60 days of the agreement being entered into. Unless the Land Registrar directs otherwise, the information will be provided by a conveyancer – the Government’s reason is that this provides assurance that the information is accurate.

Process for collecting information about existing agreements

Grantees will be required to provide data on existing agreements entered into from 6 April 2021 (5 years before the expected commencement of the regulations, 6 April 2026). The date must be provided by 5 April 2027. Data will also be collected on existing agreements entered into at any time, if they are varied in such a way that alters any of the required information, or are assigned from expected commencement, or terminate or expire in whole or part. The data must be provided within 60 days of, presumably, 6 April 2026 or the date of the variation agreement or assignment entered into after commencement, or termination or expiry. This wouldn’t apply to agreements with less than 12 months to go at the relevant time. Again the information will be provided by a conveyancer unless the Land Registrar directs otherwise.

How will the regulations be enforced?

If when seeking to register a notice or restriction the relevant information is not provided, the Land Registry will refuse to register the notice or restriction. This will not, however, prevent registration of a transfer.

There are criminal offences to, in the Government’s words, dissuade those who may seek to avoid providing the required information. Someone may be fined or imprisoned if they fail, without reasonable excuse, to provide the information, or knowingly or recklessly provide information that is false or misleading. The offence would be applicable to the grantee and their professional adviser on the matter.

How will the information be publicised?

The Government proposes to publish structured data, in bulk, in a downloadable format using the same approach as existing Land Registry open data on GOV.UK - for example, in CSV files. They anticipate that property tech companies will be able to access the data and incorporate it into existing (or new) tools and views. It is intended that all contractual control information will be a data set that is publicly available for free. There is no plan to collect or publish the underlying agreement itself.

Comment

While there may be some benefits of having publicly available information about agreements that contractually control land (for example for local planning authorities), there are a number of concerns. A few are listed below:

• The Land Registry already has serious resourcing challenges leading to excessive delay in processing applications. Although the regulations are unlikely to go live for over 2 years, there will be worries about whether the Land Registry will have the resources to cope with the additional work involved with these regulations, without there being an adverse impact on their other workflows. 
   
• Although the regulations are unlikely to come into force before April 2026, the requirement to provide information applies to agreements entered into from 6 April 2021 and even earlier in certain circumstances. Questions will be raised as to whether it is appropriate for the regulations to have this retrospective application. A grantee of an option agreement may have entered into an agreement say in April 2022 and protected this at the Land Registry with a unilateral notice (meaning that the agreement did not need to be submitted and only limited information needed to be provided). This may have been done for the very valid reasons of confidentiality and commercial sensitivity and yet now, retrospectively, information will need to be provided with criminal sanction for failure to do so. The approach is reflecting a recent trend, see for example the retrospective impact of the proposals on existing ground rents Government Consultation on capping existing ground rents (cms-lawnow.com). The Government should give consideration to the regulations only applying to future agreements.
   
• There are criminal offences for a failure to comply. While the Government is presumably including these as a strong incentive for relevant parties to comply, the question should be raised as to whether this is an appropriate remedy for breaches of these regulations.
   
• If the purpose of the regulations is ultimately to provide greater transparency in relation to the practice of land banking for example in the context of housing development, is it appropriate for the regulations to affect land intended for the development of commercial property? Also, option agreements, pre-emption agreements or conditional contracts, even if they have some link to development, are not necessarily always used for land banking. Such agreements may be needed for example to allow time to obtain a relevant planning permission for the relevant development.
   
• Being able to access publicly available data about contractual control agreements may have the unintended consequence of driving up prices and deterring future development. The impact assessment highlights that there is a risk that the availability of the information may enable better prepared objections during the planning process, potentially delaying or preventing development. 
   
• No evidence has been provided to demonstrate how the regulations will specifically encourage the construction of new housing. Other factors such as the planning system (for example, extensive pre-commencement conditions) or local economics may well be bigger reasons why new housing developments are being stalled.  
   
• The grantee of a relevant agreement may need to incur additional costs in seeking professional advice to comply with the requirements – this is particularly an issue for agreements entered into before the regulations come into force.

Responding to the consultation

Responses must be provided by 20 March 2024 and here is a link to the consultation Contractual controls on land: consultation - GOV.UK (www.gov.uk).