Will privatisation put our land registration system at risk?

Will privatisation put our land registration system at risk? James Ferguson, a Director of X-Press Legal Services in Cornwall & Devon, examines the government’s proposals to privatise the Land Registry and gauges the reaction of the property sector.

Background

Options on how Land Registry operations could be moved into the private sector have been published for consultation by the Department for Business, Innovation and Skills (BIS). In its consultation document, BIS set out its reasons for making a change and its preferred option to do so. The deadline for responses is 26 May 2016.

What is the government’s rationale behind pursuing the privatisation of the Land Registry?

The government has been upfront about their main reason for wanting to privatise the Land Registry. They have stated in the privatisation consultation document and in the Chancellor’s Autumn Statement that their prime motivation is to raise funds to pay down debt.

Their second reason is they believe that in private hands the Land Registry will have access to additional investment to drive an accelerated programme of improvements to the service.

Thirdly, they believe that private sector ownership could make the most of products based on the Land Registry data.

How would a shift to the private sector affect the operation of the Land Registry? Could the privatisation affect the role/accountability of the Land Registry?

The proposal is for a private company to make changes to the registers of property whenever a transaction occurs—whether that involves citizens, companies, lending institutions, local and central government or the Crown.

The government would retain ownership of the Land Register itself and the register would remain the only title to land recognised by law. The government would also continue to provide a state-backed guarantee to reimburse losses incurred as a result of an error in the register, but as Labour’s shadow business secretary Angela Eagle put it:

‘The government are privatising the profits of the Land Registry whilst retaining the risk.’

Currently, the government sets the fees for accessing Land Registry services. With privatisation it is likely that fees would be controlled by a regulator.

What are the risks of privatising the Land Registry?

Any private company that buys the Land Registry will be focussed on one thing: How can they best make a return on their £1bn plus investment? A private company may be tempted to concentrate on more profitable non-registration services resulting in resources being diverted away from core registration services. Or they may increase the transaction fees for making changes to the register.

The Land Registry operates a monopoly service, meaning there are no competitors. Is it the government’s intention to create a private sector legal monopoly? Alternatively, are they planning to sell it off to more than one private company? The thought of more than one private company being responsible for making the thousands of daily changes to the register is alarming.

But it is not just our land registration system that is at risk. The government has recently begun the task of transferring responsibility for another statutory register, the Local Land Charges register, away from around 360 local authorities in England, to be centralised under the Land Registry. A massive task that will take years to complete and which the successful private bidder will have to continue.

Concerns have been voiced by the Law Society about the ability of the Office of the Chief Land Registrar to regulate and manage an external service delivery company effectively, as the government’s previous attempts at managing external agencies cannot be counted as a success.

The move could also undermine confidence in Land Registry data, jeopardise the service it provides to home buyers and erode employment conditions for staff.

But one of the biggest fears is the threat to the integrity of the register if it is in private hands. It has taken 150 years to build the Land Registry’s reputation for impartiality and freedom from commercial or specialised interests. Could actual or perceived impartiality be maintained, or public confidence sustained, if a private company were to assume responsibility for the maintenance of a public register?

How is the property sector reacting to the possibility of a privatised Land Registry?

The vast majority of people I have talked to in the property sector are against the privatisation plan.

The government has made some changes to the proposal that was defeated two years ago in which 91% of respondents to the consultation didn’t agree that privatising the organisation would result in a more efficient Land Registry and 89% said they would not be comfortable with the private sector processing land registration information.

However, the basic proposition remains the same. A private sector company will be in charge of the data for £4trn worth of property ownership in England and Wales.

A petition against privatisation of the Land Registry has reached over 200,000 signatures.

Do you have any final observations?

It’s worth noting that the Land Registry holds over 24 million titles of land in England and Wales and employs over 4,500 people in 13 offices throughout England and Wales. The government’s commitment to build one million new homes by 2020 will need a fully functioning and effective Land Registry to administer the new titles.

X-Press Legal Services supplies conveyancing searches and support to solicitors and conveyancers throughout England and Wales.

Interviewed by Kate Beaumont.

The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

 

Filed Under: Property

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