The Levelling-Up and Regeneration Bill is currently working its way through Parliament. Much of the focus has been on the planning and CPO proposals but the bill also contains draft legislation which will have far-reaching implications for the real estate sector. Part 8 of the Bill, which introduces the government’s controversial rental auctions scheme for vacant high street premises, has grabbed much of this attention. However, Part 9, tucked away at the back of the Bill, which requires those with an interest in land to provide information to the Land Registry, has received very little commentary.
What is Part 9 about?
Part 9 gives the Land Registry the right to collect information about dealings in land. The fine detail of exactly what information is to be provided, under what circumstances it will be required and how it is to be provided will be set out in regulations to be published separately. This makes it difficult to know how far-reaching Part 9 of the Bill will be.
What we know so far is that those regulations may require information to be provided to the Land Registry to identify persons who:
- Own relevant interests in land
- Have relevant rights concerning land
- Have the ability to control or influence (directly or indirectly) the owner of relevant interests or rights relating to land, or
- If it is useful in ascertaining the nature, extent or duration of that ownership, those rights or that ability.
The Land Registry may also require transactional information about contracts and other arrangements affecting interests and rights relating to land. This could include details of:
- The parties to a transaction
- The persons on whose behalf the parties to the transaction are acting
- The terms of the transaction
- The persons providing professional services in relation to a transaction, or
- The source of any money paid or other consideration given.
The Regulations may provide for:
- The retention of the information, the sharing of the information with government departments and the publication of the information
- The payment of fees by persons required to provide the information to the Land Registry in respect of the Land Registry’s administrative costs in connection with retaining, sharing or publishing the information
- The creation of offences in connection with failing to comply with the provision of information requirements, and
- The prevention of the Land Registry to undertake certain registration activities until the required information has been provided.
The government asserts that it requires the information to meet its transparency commitments through collecting and publishing data on contractual arrangements used by developers to control land. It hopes that this transparency will help identify land that may be suitable for housing, allow communities to play a more active role in developing plans and help new entrants to the market. The government is concerned that the lack of transparency inhibits competition because SMEs and new entrants to the market find it hard to acquire land and it suggests that greater transparency will also help to tackle “land banking”. This is despite the findings of Sir Oliver Letwin’s independent review into house building, undertaken with the aim of explaining the gap between housing completions and the amount of land allocated or permissioned in areas of high housing demand. The Letwin review concluded that land banking, in the sense that developers “lock-up land” from the market by waiting for its value to increase before receiving planning permissions and then selling the land on for a substantial profit, is simply not consistent with housebuilders’ business models.
The government also claims, with more justification, that the information is required to help identify attempts to evade sanctions or the disclosure requirements placed on companies owning UK land and property contained in the Economic Crime (Transparency and Enforcement) Act 2022. There is also a suitably nebulous provision that the information is additionally required for “wider national security and macroeconomic purposes”.
A “level-up” for transparency but a “level-down” for privacy; why those with interests in land should be concerned
Those operating in the real estate sector may have a number of concerns with these disclosure requirements. The chief concern will be the obligation to disclose commercially sensitive information. Currently, developers who have entered into a contractual arrangement such as a right of pre-emption, option or conditional contract, will almost invariably choose to protect their interest at the Land Registry by means which are intended to keep commercially sensitive information private. The draft bill doesn’t specify whether commercially sensitive details will be exempt from the provision of information regulations though it seems unlikely given the extensive list of information that could be required to be provided under the awaited regulations.
Furthermore, most of the important detail will be set out in secondary legislation which means it is vulnerable to a lack of parliamentary scrutiny. We don’t yet know, for example, how the information will be required to be provided, by whom and under what circumstances. In their 2020 consultation, “Transparency and competition: a call for evidence on data on land control” (on which evidence the government has never responded) the government proposed that parties to contractual control interests would not be able to protect their interest at the Land Registry until the required information has been supplied. Not only that, but the government also invited views on making the notice mandatory in certain cases and requiring corporate beneficiaries to certify in the annual accounts that all relevant interests are the subject of an agreed notice. It may be then, that the government is veering towards blanket provisions requiring all those with contractual control interests in land to provide extensive information, rather than just targeting selected persons.
We don’t yet know exactly what the government intends to do with the information once it has it. Worryingly, the Bill provides for the information to be published but does not specify what information will be published and where. The 2020 consultation proposed publishing a “contractual controls interests dataset” which will supposedly “allow the public to easily understand what land is subject to a contractual control, who is the beneficiary of that control and on what terms control is exercised”. It’s not clear whether that is still the intention or indeed what the benefit of such a register would be.
Costs and consequences
The proposed bill also requires anyone providing this information to pay a fee to the Land Registry to cover the cost of doing so. Again, we will have to wait to understand how this will work in practice: regulations will tell us who will be required to provide the information and therefore pay the fee (the landowner?) and how much they will be required to pay. It is an odd idea that the Land Registry will charge an unsolicited fee to an unsuspecting recipient of an information request.
Finally, non-compliance with the provision of information requirements will be a criminal offence; anyone who fails to comply may face a fine or imprisonment.
It is impossible to assess the full extent of the requirements before seeing the regulations, but the bill, if passed as it stands, would impose these requirements not just on those at whom the provisions are professed to be targeted, but all businesses and individual who may legitimately want to keep commercial and family arrangements private and confidential.