What does the proposed reform of the Local Land Charges register mean?By: Caroline Mortimer

On 5 June 2014 the Infrastructure Bill was introduced into Parliament. It includes proposals which are intended to boost the economy by £2.6 billion over the next ten years, including the transfer of responsibility for maintaining the Local Land Charges registers to the Land Registry.

The administration of a register of Land Charges is not the most immediately exciting part of the Bill, but it is an important one. While the Land Registry believes a central register will be more efficient and transparent, the Council of Property Search Organisations have said that the plans could destabilise the housing market, and called it “a pre-meditated process of fattening up” the Land Registry before privatisation.

Why are Local Land Charges important?
At the moment, registers of Local Land Charges (LLCs) are maintained by 348 local authorities. An LLC is a binding obligation or restriction that attaches to a property, so a search of the register is an essential part of the process of buying, mortgaging or leasing any property.

There is a long list of LLCs, but the most common include listed building status, planning obligations, compulsory purchase orders, tree preservation orders and financial charges.
Because LLCs attach to the property they are binding on purchasers, on mortgagees if they repossess the land, and will in some circumstances be enforceable against tenants (depending on the form of land charge and terms of the lease). So if someone buys a property for a bargain price without searching the LLC register, they could find a nasty surprise of liability for many thousands of pounds of unpaid financial charges.

A central register – sounds like a good thing?
The Infrastructure Bill extends the Land Registry’s powers to give them the responsibility of maintaining a centralised register of LLCs. The Land Registry has argued that a centralised register will mean a standard service (rather than the current service, which varies significantly between local authorities). They would be able to provide standardised and transparent costs, as well as faster and more predictable response times.

A search of a centralised register (which would probably be delivered through the Land Registry’s existing online service system) should also be more efficient than the current approach. Search requests would be submitted online and processed electronically, fitting in with the Government’s strategies of cutting red tape and of services being “digital by default” – cost efficiency being the order of the day.

So what’s the problem?
When the Land Registry published their proposals in early 2014 they indicated that only LLCs going back 15 years would be retained on the register. If this remains the case then a purchaser could buy one of the 430,000 buildings listed before 1999 and not know that it is listed – even after carrying out an LLC search. A purchaser could then commit a criminal offence by unwittingly carrying out alterations on a listed building.

There could also be a problem with new information. The Land Registry will be receiving information on LLCs from 348 local authorities and if the information is not provided in good time or if the register is not immediately updated then there will be an information gap between an LLC being made and being entered on the register. A purchaser could buy a property with a recent LLC but be entirely unaware of it.

To be entirely safe, two searches would be needed: one of the central register and one at the local authority to check historic and recent LLCs – not the efficient and cost-effective system intended.

Anything else?
There is also a fear that this proposal to transfer the LLC register will be the thin end of the wedge for extending the powers of the Land Registry (a cliché, but an appropriate one in this instance). The Government press release for the Infrastructure Bill stated that an extension of powers would “allow [the] Land Registry to play a wider role in the property market”… (insert sound effects of doom as appropriate).

The Law Society and others have raised concerns that diversifying the functions of the Land Registry will divert the organisation from its central remit of land registration towards more profitable sidelines (such as the LLC register), in readiness for privatisation. A privatised Land Registry could mean a real or perceived loss of impartiality, transparency and freedom from commercial interest, leading to a loss of faith in the land registration system. But that is a discussion for another day.

As to the Land Charges register, it remains to be seen what the proposals will look like once the process of Parliamentary amendments takes hold in earnest. Whatever happens though, it’s sure to keep the lobbyists busy.

About the author

Caroline Mortimer
 is a Solicitor with IBB Solicitors.