Over three years have passed since we first blogged on the topic of the government’s proposed contractual control register, which initially emerged as part of a consultation on Planning for the Future, and was then incorporated into the Levelling Up and Regeneration Bill, which has since been passed into statute and now exists as Chapter 11 of the Levelling Up and Regeneration Act (“LURA“). The proposed contractual control register is yet another limb of the government’s increased focus on transparency around the ownership of land, with the government’s ambition being that “information on certain contractual control agreements is freely accessible and available so as to allow communities to find out more about where land is being brought forward for development, support developers to identify sites, and others to understand where and how land is under control“.
The government has now opened a consultation on the proposed register of contractual controls, together with draft regulations which would implement the disclosure regime. In this article, we highlight the principal themes of the consultation and the draft regulations.
Which contractual arrangements will need to be disclosed?
The consultation states that the government’s intention here is to capture contractual control agreements (of the types specified below) that have been entered into to secure land for residential, commercial or mixed-use development for the purpose of an undertaking (such as a business, charity or body exercising a public function). This casts a very wide net in terms of property that could potentially be subject to disclosure requirements, and as such, the government proposes the following conditions must be met for a contractual control arrangement to have to be disclosed to the Land Registry:
- The arrangement must be in writing and constitute:
- an option that binds the title holder to enter into a relevant disposition (being the transfer of a legal estate in land or the grant of a registrable lease, being one with a term of more than seven years from the date of the grant); or
- a conditional contract that binds the title holder to enter into a relevant disposition once specified conditions have been met; or
- a contractual right of pre-emption or any other contract that prevents the title holder from making a relevant disposition of that estate or which regulates the circumstances in which the title holder can do so.
- The contract must relate to registered land. Whilst this leaves a disparity between the treatment of registered and unregistered land over which there are contractual controls, it is perhaps understandable that the Land Registry does not want to open the register to unregistered land when the contractual arrangements in scope do not currently trigger first registration.
- The arrangement must subsist for 12 or more months, or if shorter, must include a right for the grantee to extend the agreement.
- The arrangement will be caught by the registration requirement if it was entered into at any time after 6 April 2021 (such date being five years from the expected commencement of the regulations), or it is an existing agreement which is varied so as to alter any of the specified information, or it is assigned at any time after the date of the commencement of the regulations (see below for further detail on the timing of the registration requirements for existing agreements).
Certain agreements will be exempt from the registration requirements, such as those which have a “national security” purpose or which are made to facilitate finance agreements. After consideration with stakeholders, the government have also chosen not to include restrictive covenants and overage agreements within the scope of the regime.
What information will be displayed on the register?
The government is conscious that a balance needs to be sought here between releasing enough information for the register to serve a purpose and keeping commercially sensitive information away from the general public. As such, the underlying agreement will not itself be made available for inspection on the register, but the following data will be made available as a dataset available for download on the Land Registry’s website, with the potential for options to be developed in the future to allow the data to be searched, for example, by reference to title number:
- Type of agreement – option agreement, conditional contract or contractual right of pre-emption;
- Name of grantee and (if applicable) registration number – the person entitled to acquire a relevant disposition or to enforce the provisions of the contractual control agreement;
- Name of grantor and (if applicable) registration number – the proprietor of the registered title that is subject to the contractual control arrangements;
- Key dates – this includes the date of the agreement as well as the start date and end date of the contractual control arrangement;
- Details of any entitlement to extend the agreement;
- Territorial extent of the agreement;
- Title numbers for the land affected; and
- Solicitors Regulation Authority (SRA) number for those involved in the agreement, for compliance purposes.
Who must register the contractual control?
For new agreements entered into once the regulations have commenced, the grantee will be obliged to provide the above information within 60 days of the agreement being entered into. If the grantee also wishes to protect their interest in the land by applying for a notice or restriction on the relevant titles (as is commonly the case), they will have to provide the above information before they can register their notice or restriction. For those who elect not to protect their interest in the traditional way, this does not absolve the grantee of the obligation to register the contractual control arrangement in the new register.
For existing agreements which pre-date the implementation of the regulations, grantees will have a year from the commencement of the regulations in which to provide the necessary information to the Land Registry. However, agreements which have less than 12 months to run as at the commencement of the regime will be exempt from the registration requirement, as the government acknowledges that there is little merit in collecting data on controls which will fall away in the near future.
Should a registered contractual control arrangement be varied, assigned or terminated during its term, the updated terms of the agreement, or the termination thereof, will need to be notified to the Land Registry within 60 days of the variation, assignment or termination taking effect.
Interestingly for those lawyers among us, the consultation also proposes that the information can only be submitted by a conveyancer, so as to be assured that the information provided is accurate (and explaining the requirement that the SRA number for the submitting conveyancer forms part of the application information). Whilst there is a definite advantage for the Land Registry in requiring conveyancers to verify the information submitted rather than carrying out their own investigations as to its accuracy, conveyancers may feel that this is a professional burden too far, and the contracting parties may not appreciate having to instruct a lawyer and pay additional costs to submit their application on their behalf.
What happens if the grantee fails to register?
In order to ensure compliance with the new registration regime, the Land Registry will refuse to register any notices or restrictions relating to the contractual control agreement on the relevant titles until the necessary information has been submitted (although the Land Registry will not prevent registration of the transfer of any registered estate associated with the contractual control agreement). Furthermore, failure to comply with an information requirement constitutes a criminal offence under LURA and if found guilty of knowingly or recklessly providing false information in response to an information requirement, a professional will be subject to up to two years’ imprisonment and an unlimited fine.
The consultation runs from 24 January 2024 to 20 March 2024. Whilst the consultation acknowledges that there are potential unintended consequences of the further transparency that the register would promote, those stakeholders involved in the development of land may wish to submit their views as to whether yet another registration and disclosure regime is likely to increase or decrease investment and development opportunities in the market.
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