The Government considers that better data on land ownership and control is required to achieve its vision for the planning system, to improve the development process and to increase the public’s understanding of who exercises control over land.
The Government’s particular focus is on rights of pre-emption, options and conditional contracts and it has published a consultation “Transparency and Competition - A call for evidence on data on land control”, seeking views on how best to improve transparency around them and what additional data should be made public. Some beneficiaries of those rights will have concerns about the public disclosure of what may be quite detailed sensitive information. Responses to the consultation are to be provided before 23.45 on 30 October 2020.
The data provided by HM Land Registry (HMLR) on the control of land is limited. This consultation sets out proposals to increase the transparency of contractual arrangements used to control the buying or selling of land. These proposals relate to England and may apply to Wales subject to the agreement of the Welsh Government.
The Government considers the lack of data leads to a market failure resulting in local communities not being able to understand fully the likely path of development in their area; and raising a barrier to entry for small builders and new market participants. It considers there is a public interest in the publication of better data on land that is subject to contractual controls, the nature of those controls and their beneficiaries and, therefore, proposes to collect and publish such additional data.
It is particularly interested in rights of pre-emption, options and in the case of estate contracts, those that may complete more than 6 months after exchange and include a condition requiring the grant of planning permission.
It is proposed to have some additional data on those rights on the land register and to publish—free of charge—a contractual control interests dataset. Other data collected will be limited to official use and shared across government for the purposes of national security, law enforcement and financial stability. Details of the proposed additional data requirements and what can appear in the land register or dataset can be found in Annex A to the consultation. Price/fee information will not appear in the land register or dataset, but other information such as a lockout period will appear in the dataset and start date and longstop date in the land register and dataset.
Those rights are currently and generally protected by a notice at HMLR and the proposal is to adapt through new legislation the current agreed notice system to incorporate the collection of additional data for registered land. There is no proposal to extend the new system to unregistered land. The Government intends to retain current HMLR procedures for excluding prejudicial information, but not where it is additional data that needs to be provided under the new regime.
The proposal is that parties to contractual control interests would not be able to apply for an agreed notice at HMLR until the additional data has been supplied and the ability to use a unilateral notice will be removed. In case the beneficiary of the interest eschews using a notice and seeks to use a restriction to protect their interest, the Government will consider whether such interest should not be capable of protection by a restriction.
There is also the suggestion that there may be benefits in collecting more granular data on the conditions included in estate contracts or options.
To assist with this process, the Government proposes to ask all legal entities that are beneficiaries of contractual control interests to provide a legal entity identifier (LEI), which is an alpha-numeric code originally developed to provide a unique identification of corporate entities participating in financial transactions. A requirement for beneficiaries to hold an LEI simplifies the process for establishing “who owns whom” as legal entities that have an LEI will report their “direct accounting consolidating parent” as well as their “ultimate accounting consolidating parent”.
The Government is considering requiring holders of such interests to update the additional data if the interest is subject to variation, assignment or novation.
Views are sought on whether the requirement to provide additional data should extend to existing arrangements, but this would be limited to where the existing interest is varied, assigned or novated. If the additional data is not provided within a certain timescale, HMLR protection would be lost.
There is also a proposal for a new requirement on beneficiaries to certify in annual accounts that all relevant interests are the subject of an agreed notice, with possibly a duty for the board of a legal entity to certify that all relevant interests have been noted.
There are exemptions for rights held by individuals relating to the purchase or lease of residential property for use as a domestic residence, but the exemption is lost if an option is subject to a condition requiring planning permission.
Conclusion and how to respond to the Consultation
This consultation on proposed increases in the transparency of contractual arrangements used to control the buying or selling of land may concern some beneficiaries of such arrangements.
Please click here to find the Consultation paper and how to respond. The deadline is 23.45 on 30 October 2020.