Imagine the surprise and dismay of Mr X, a client with a wonderful £15 million house in one of London’s smartest postcodes, upon discovering some years ago that it had been transferred without his knowledge to a third party.
This was only discovered when Mr X approached us to transfer the property to a relative. Unravelling this unfortunate situation was a long and tortuous process. However, the state-backed guarantee offered by the Land Registry meant that Mr X was compensated for the costs incurred in rectifying this fraudulent transfer.
Anyone who has ever bought, sold or had any other dealings with land will appreciate the essential role that the Land Registry plays as a trusted source of guaranteed and authoritative information. Its principal function is to keep a register of title to freehold and leasehold land and charges throughout England and Wales and to record dealings in land once it is registered.
Recently celebrating its 150th anniversary, the glory of reaching this landmark has been somewhat overshadowed by the publication of a consultation document by the Department for Business, Innovation and Skills (BIS) proposing its semi-privatisation.
The consultation document proposes the creation of a new company, subject to government oversight, which would be responsible for land registration services and which could be sold or managed by the private sector. BIS argue that this restructuring will allow for the business of land registration to be more delivery-focused, increasing the flexibility of the Land Registry’s operation and reducing the risk of error and fraud.
However, this week, the Law Society has expressed concern about the BIS proposals, warning that the privatisation of the Land Registry could have a serious impact on the integrity of the register. The Law Society has voiced concerns about potential conflicts of interest, and whether privatisation will make the land registration and conveyancing process more complicated and thereby increase costs.
The main practical question for sellers, buyers and owners of property is whether changing the status of the Land Registry will affect their ability to rely on the accuracy of the Registry’s records – and the Government-backed indemnity which allows for the correction of the register and the payment of compensation in the event of mistakes, as Mr X discovered.
While there are no available statistics on the use of this indemnity, it is crucial in cases where (through fraud or error) a property is wrongly registered or transferred. BIS has confirmed that the accuracy of the information in the register will continue to be guaranteed by the government even where the processing is carried out by a private body.
For the time being, the BIS proposals remain merely proposals, and a consultation which closed earlier this month is likely to flush out any points of concern. Private or public, the one vital thing is to ensure that the Land Registry will remain the one sure place in the sometimes complex and contentious world of property rights and property transfer, providing essential security to future owners, lenders and prospective purchasers.