Second Reading Committee
Thursday 29 November 2001
[Mr. Mike Hancock in the Chair]
Land Registration Bill [Lords]
The Parliamentary Secretary, Lord Chancellor's Department (Mr. Michael Wills): I beg to move,
That, during the proceedings on the Land Registration Bill [Lords], the Committee do meet on Tuesdays at half-past Ten o'clock and at half-past Four o'clock and on Thursdays at half-past Nine o'clock and at half-past Two o'clock.
Mr. John Burnett (Torridge and West Devon): I welcome you to the Chair, Mr. Hancock. I am entirely happy with that agenda.
Mr. William Cash (Stone): I welcome you yet again, Mr. Hancock, and concur with the proposal.
The Chairman: I am delighted about that.
Question put and agreed to.
Mr. Wills: I beg to move,
That the Chairman do now report to the House that the Committee recommends that the Land Registration Bill [Lords] ought to be read a Second time.
I begin by welcoming you formally, Mr. Hancock. I have enjoyed our previous encounters and look forward to this one.
The Law Commission, whose work on an unusual joint project with the Land Registry led to the Bill, believes it to be the single largest project of law reform that it has ever undertaken. It is also one of the finest and will have a direct impact on the lives of millions of people who buy and sell property in England and Wales each year. I suspect that most Members have an interest in the Bill as home owners. I do, and as my wife and I also own a long leasehold on commercial property which would be affected by the changes in the registration period of leases, I declare a wider interest.
The Bill can be viewed in two ways. First, it represents the culmination of the long process through which land registration has developed to dominate the recording and guaranteeing of title to land in England and Wales. It also marks a new departure by providing the framework for electronic conveyancing which, through relatively minor alterations in the law, will change the way in which conveyancing services are provided and make a major contribution to the Government's campaign to improve the home-buying process.
I shall start with the past. The Bill will wholly replace the Land Registration Act 1925, which was in many ways backward looking because much of it derived from elements in Acts of 1875 and 1897. Although the development of the system of land registration began in earnest 60 years earlier, it was still, if not quite an infant, barely a toddler. Compulsory registration began in 1897, but by 1925 it still applied only in Greater London. Its extension to the rest of England and Wales did not accelerate in earnest until after the second world war. Compulsory registration finally covered the whole of England and Wales only in 1990.
Land registration has necessarily sat alongside the essentially historical process of unregistered conveyancing, which derives a relative title from the deeds and other papers relating to the property, and from what is known about the land, its history, its current condition and occupiers. Unregistered conveyancing, which falls outwith the Bill, is a body of law that has justly deserved a reputation for complexity. That has provided endless intellectual stimulation to generations of lawyers. It is not a system noted for giving users clarity of information about the land, its benefits and obligations, the identity of the owner, and the extent of his or her powers. That is essential information. It is the aim of the system of land registration to do that in the clearest and most comprehensive way possible, and for the resulting register to be guaranteed by the state. The Bill will extend and refine the achievements of previous land registration legislation.
First, the Bill will lead to more land and more interests in land being protected by registration. Some valuable interests—for example, fishing and shooting rights—will, for the first time, be registrable voluntarily.
Secondly, the scope of compulsory registration will also be increased, in particular by bringing most leases and, therefore, most commercial property transactions, within its reach.
Thirdly, what the register tells us about the land will be extended and improved, most notably by reducing the number and scope of interests that can impose burdens without appearing on the register. The benefits of the registered system will also be extended. The procedures protecting the rights of third parties over land will be simplified and strengthened. The protection that registration offers to registered owners against squatters will be improved.
Those reforms and improvements alone represent a formidable achievement. Cumulatively, they will have the effect of making the law clearer and more certain. They might have been sufficient on their own to ensure that, within a relatively short period, land registration would completely replace unregistered conveyancing. However, in a few clauses the Bill will also hugely increase the attraction of registration. It will open the way for radical changes over time in the way in which the formal documents required in conveyancing are prepared, the quality and speed of the services that conveyancers are able to provide, and in the relationship between conveyancers and the Land Registry. That process, which is described in shorthand as electronic conveyancing, will complete a technological revolution in which the Land Registry has been engaged for more than a decade.
Successive chief land registrars have given high priority to the progressive automation of the registry's work. Imaginative and successful projects, usually in partnership with the private sector, have revolutionised the delivery of services. The most fundamental of those projects has been the translation of all registered titles into computerised form. At the end of last year, 96 per cent. of all titles were held in that way and by the end of 2003, all titles will be. Work is now under way on the huge project of making all the millions of supporting documents referred to in the register available electronically. That, too, will be complete in 2003.
The registry's customers are increasingly used to online services. A wide range became available in 1994 and the Land Registry direct service now deals with approximately 350,000 transactions each month, generating a monthly fee income of around £500,000. In 1999, it also became possible to notify the discharge of a mortgage electronically. There are now around 48,000 online notifications each month. The Bill will crown those developments by making it possible to execute and deliver the formal documents effecting disposition of land or interest in land by electronic means. For buyers, transactions will be quicker, cheaper and thereby less stressful.
The two themes of improving the register and developing electronic conveyancing come together to produce the single, fundamental objective for the Bill. Under the system of electronic dealing with land that it seeks to create, the register should be as complete and accurate a reflection of the state of title of land at any given time as is reasonably practicable so that it is possible to investigate title to land online with the absolute minimum of additional inquiries and inspections. The implications of that objective are considerable and virtually all the changes that the Bill makes to the present law flow directly from it.
I shall proceed to consider more specifically but relatively briefly how the Bill gives effect to that objective and its implications.
Part 1 continues the register of title. The heart of the Bill's measures to improve the inclusiveness and comprehensiveness of the register are to be found in parts 2 and 3, which cover the first entry of land or an interest in land on to the register, and subsequent transactions, respectively. Together, they tackle the problem that the land register is currently not complete, either geographically or in terms of the interest it records.
Part 2 describes when unregistered land can or must be registered and offers better protection for people with legitimate interest in knowing when land will be added to the register. Voluntary registration will become possible in two cases where it is presently not. Certain incorporeal rights—notably fishing and shooting rights, which often have considerable economic value and are frequently bought and sold—will become registrable.
The most important change to the provisions governing compulsory first registration is that the length of granted or assigned leases that are subject to compulsory registration will be reduced from 21 years or over to seven years or over. The Lord Chancellor will also be given powers to change the triggers for compulsory registration. The most likely use of those powers is to reduce further the length of leases requiring registration, should that meet the needs of the market and be possible for the Land Registry at the time.
Currently, most business leases cannot be registered. Commercial conveyancing is therefore required to use cumbersome and complex unregistered law, and is excluded from the current benefits and protections of registration, and from those that the Bill will develop.
There is a linked gain. All changes that increase registrable estates will also increase information on property transactions held by the registry. Such changes will therefore enhance the registry's ability to improve transparency in the property market by publishing accurate and neutral information on prices and market trends. Such information will undoubtedly be widely welcomed and will help development of the property market.
The Bill makes it clear who should apply for registration where that is compulsory, what happens if that is not done, and who is liable for defective transfers in such cases. It also tackles the problems associated with unregistered rights or obligations, which, regrettably, remain excessively frequent.