Consultation Land Registry, Wider Powers and Local Land Charges

Consultation

Land Registry, Wider Powers and Local Land Charges

JANUARY 2014

Contents

Introduction………………………………………………………………………………………………..3

1. Foreword from Ed Lester, Chief Land Registrar and Chief Executive……………………………4

2. Executive summary……………………………………………………………………………………5

3. How to respond ………………………………………………………………………………………10

4. Confidentiality and data protection………………………………………………………………....11

5. Help with queries……………………………………………………………………………………..11

6. General background…………………………………………………………………………………12

7. Wider Powers…………………………………………………………………………………………14

8. Local Land Charges...... 17

9. What happens next?...... 27

Annex A: Consultation principles………………………………………………………………………28

Annex B: List of individuals/organisations consulted………………………………………………..29

Annex C: Impact assessment for ‗Land Registry and Local Land Charges‘………………………32

Annex D: Glossary of abbreviations and initials……………………………………………...... 33

Annex E: Engagement with local authorities…………………………………………………………34

Introduction

Land Registry‘s strategy for 2013 to 2018 is based on meeting the needs of its customers and stakeholders, being recognised as the world leader in digitising land registration services and in the management and re-use of land and property data. Three of its themes relate to Land Registry (LR) playing a greater role in the property sector to:

unlock efficiency in the public sector and the land and property market maximise the re-use of data for the benefit of the wider economy increase and extend the assurance and compliance provided to the market.

In order to pursue this strategy, LR is seeking to extend its current legal powers to enable it to provide the following services:

information and register services relating to land and other property consultancy and advisory services relating to land and property generally.

This would include the power to scope and bid for such work.

One such service is Local Land Charges (LLC) which LR is already well advanced in its discussions with local authorities (LAs) and other stakeholders. Therefore LR is also seeking to obtain authority to take over the statutory function for holding and maintaining a composite Local Land Charges Register (LLCR) for England and Wales. This will also involve the provision of LLC searches. It will be necessary to change the Local Land Charges Act 1975 (LLCA 1975) to enable LR to take over statutory responsibility for LLC.

This consultation is in two parts:

the first part (section 7) relates to its proposal to extend LR‘s powers under the Land Registration Act 2002 (LRA 2002) to enable it to provide services relating not only to land registration but also to land and other property the second part (section 8) relates to LR‘s proposals to amend the LLCA 1975 to enable LR to provide a more consistent, standardised LLC searches system.

The purpose of this consultation is to give all persons with an interest in the property sector the opportunity to consider and comment on the proposals.

Consultation commencement date: 16 January 2014

Respond to consultation by: 9 March 2014

This consultation is relevant to LR customers, stakeholders and others who have an interest in the property sector.

1. Foreword from Ed Lester, Chief Land Registrar and Chief Executive

As Chief Land Registrar, I have day-to-day responsibility for the management of Land Registry. Our main purpose is to register ownership of land in England and Wales and to record dealings with land once it is registered. In addition, we provide data and ancillary services in relation to the registration of land.

Land Registry is integral to the stable and effective functioning of the property market in England and Wales. We take great pride in the work we carry out and understand our roles and work hard to deliver our products and services to the highest standard. Customers have confidence in what Land Registry does. As an organisation we are customer focused and work with our customers and stakeholders to understand their needs, which are diverse and increasing. Customers need Land Registry to help make the conveyancing process quicker, cheaper and easier to complete. Land Registry also faces new demands from the data community and we must ensure our overall aims align with wider government initiatives to benefit the wider economy.

This paper sets out the reasons behind our proposal to seek an extension of Land Registry‘s powers. Widening our powers would mean that Land Registry would be better placed to serve the changing needs of our customers, align with our stakeholder priorities and contribute to economic growth.

As part of this, Land Registry has already undertaken a significant scoping exercise and a prototype in relation to the provision of Local Land Charges services and is seeking to explore options for working with both local authorities and the private sector in order to integrate disparate data sets and to standardise delivery. We believe that the digitisation of local authority records and the ability for customers to undertake Local Land Charges searches via digital routes will support the Government‘s strategy of digital by default. As well as improving the customer experience, it is envisaged that projects such as this will create opportunities for economic growth through the re-use of expanded public data sets.

Land Registry‘s strategy is committed to unlocking efficiency in both the public sector and within the land and property market in general. It is envisaged that by consolidating Local Land Charges information into a single register, it will drive efficiencies in the services available for the public sector and within the use of land and property data in general. It will aim to reduce the cost of transacting property and allow customers to undertake preliminary property enquiries online and immediately. A digital Local Land Charges Service will be the first step to improving the UK‘s rating within the World Bank Report as set out in this consultation.

Land Registry‘s customers, whether they are property professionals or property owners, are at the heart of what we do and we therefore need your help to make sure we are addressing your needs.

I would ask that you read this consultation and take the opportunity to make a genuine contribution to the development of policy and practice.

2. Executive summary

Since 2009, LR‘s overall business strategy has included consideration of the potential to diversify into other land and property services, including maintaining land and property registers on behalf of other parts of government. LR‘s strategy proposes a wider role for LR in the property sector through:

efficiency – unlocking efficiency in the public and property sectors

data – maximising re-use of data for the benefit of the wider economy

assurance – extending and enhancing assurance and compliance services relating to property

capability – growing and maximising the benefit of its organisational capability.

In considering possible initiatives, LR has already consulted with representative groups of its customers, government departments and those who provide land and property services which has indicated general support in principle to LR taking on a wider role.

However, under the LRA 2002, LR‘s powers are limited to land registration activities and therefore in the first part of this consultation it is proposed that its powers be extended to enable it to engage in new activities as follows:

the provision of information and register services relating to land and other property in England and Wales the provision of consultancy and advisory services relating to land and other property generally (rather than registration of land only) in England and Wales and elsewhere the power to scope and bid for and develop such services.

In addition, it is proposed that LR should have the power to set charges for new services and its powers to form, purchase or invest in companies should include activities carried out under Wider Powers.

Some property services may be governed by specific legislation and therefore a change in that legislation would be required for LR to provide those services. This is the case for LLC and further detail in this respect is given in the paragraphs below.

As part of the strategy to take on a wider role, LR has undertaken research in relation to the operation and administration of LLC searches. This research, together with widespread informal consultation with stakeholders and government departments has led LR to develop a potential alternative to the current system which is presently administered by 348 separate LAs.

LR‘s policy goals in relation to LLCs are:

to implement a transparent, standard fee that would end the current ―postcode lottery‖ and to allow payment of fees by account to standardise and improve processing times to maintain quality and integrity of data to standardise the format of results to support the government Digital by Default Agenda to support the government Transparency Agenda.

The new model anticipates a central role for LR as sole registering authority for LLCs and for LR to become a provider of LLC search results. This would require amendments to LLCA 1975 to enable the LR to:

create and maintain an LLCR acquire associated registration powers for LLCs acquire such ancillary powers as may be required, for example in relation to delegation of administrative duties to LR staff and the extension of indemnity for the actions of staff.

The new model also anticipates amendments to the LLCA 1975 to cover personal and official searches of the LLCR and to require applications for official searches and requests for personal searches to be submitted electronically to LR. It is also anticipated that the LLCR would be an amalgamation of the current 12 part register into a single register and that arrangements would need to be made so as to make the information accessible for personal search purposes in accordance with the Environmental Information Regulations 2004 (EIR 2004).

We will hold management information for the searches. The important element will be that we will offer a service for access to the data for business purposes and an online citizen service. One of the commitments we want to make is by having a single price for LLC searches, we will be introducing transparency for the pricing of a public service.

The second part of this consultation considers the consequential relationship between LAs as originating authorities and LR as the registering authority. Each refers to the need to give LR an enabling power to provide for service level protocols between LR and LAs, which would involve agreement with the Ministry of Justice (MOJ), the Department for Communities and Local Government (DCLG) and the Local Government Association (LGA) including the Welsh Local Government Association.

It is also anticipated that LR will need an enabling power to permit LR to keep a record of the creation, receipt and registration of an LLC and that arrangements will be required in relation to indemnity and accountability.

The consultation also recognises that there will need to be discussions with the Welsh Government and the National Assembly for Wales in relation to its devolved power to set fees in Wales.

LR recognises the relationship between the provision of LLC official search results alongside related LA CON29 information. This consultation only relates to LLC. CON29 information would be subject of a separate consultation to be issued at the appropriate time.

This proposal supports the government‘s digital by default agenda as the register will be held electronically, and will standardise fees, format and turnaround times for searches of that register. A digital LLC service will be the first step to improving the UK‘s rating for registering property within the World Bank Report – ease of doing business 2014. The UK is currently ranked 68 in the world for registering property and part of the ranking is affected by the different sources for property searches for the consumer.

2.1 Consultation questions

This section summarises the questions arising from this consultation. Section 3 below gives details about methods of responding to these questions. We recommend that you respond online using the bespoke consultation response form.

The response form will also ask you for some additional information about who you are and the capacity in which you are responding.

Wider Powers

Question 1

Do you agree that there is the potential to (a) streamline and bring greater efficiencies to services in the property sector and (b) introduce new services?

Comments

Question 2

Do you agree that Land Registry should play a greater role in the property market by providing (a) information and register services additional to land registration services and (b) consultancy and advisory services relating to land and other property?

Comments

Question 3

Do you have any suggestions as to new services Land Registry could consider?

Comments

Question 4

Do you agree that Land Registry should have the power to set the charges for new services?

Comments

Question 5

Do you agree that Land Registry‘s power to form, purchase or invest in companies should apply to activities carried out under Wider Powers?

Comments

Question 6

Do you have any other comments relating to this part of the consultation?

Local Land Charges

Question 7

Do you have any comments about the reasons to change Local Land Charge services and do you see any benefits?

Question 8 7

Do you agree with the stated perception that the current Local Land Charges services would benefit from reform?

Please provide comments to support your views

Question 9

Do you think Land Registry has considered all feasible options?

Please provide comments to support your views

Question 10

Do you agree that the definition of a Local Land Charge requires simplification?

Please provide comments to support your views

Question 11

Do you agree that sections 3, 4 and 5 of Local Land Charges Act 1975 should be amended as proposed?

Please provide comments to support your views

Question 12

Do you agree that Land Registry will provide Local Land Charge searches for a limited period going back 15 years?

Please provide comments to support your view.

Question 13

Do you agree that sections 8 and 9 of the Local Land Charges Act 1975 should be amended as proposed?

Please provide comments to support your views

Question 14

Should Land Registry take over the Local Land Charge registration functions of Local Authorities?

Please provide comments to support your views

Question 15

Can you suggest other areas that could be considered under the proposed protocols?

Question 16

Do you agree that a record of appropriate dates relating to the creation of a Local Land Charge will be required in order that Land Registry can accurately maintain a Local Land Charges Register?

Please provide comments to support your views

Question 17

Do you agree that Land Registry should retain the option to insure against claims and provide compensation when a claim is valid?

Please provide comments to support your views

Question 18

Do you think an electronic process and providing digital information through a single registering authority will provide business with tangible benefits by being able to make LLC1 search applications by a method other than paper?

Please provide comments to support your views

Question 19

Do you think you will need to make changes to your internal processes to make LLC1 search applications through LR channels?

Question 20

Has Land Registry correctly assessed the impact of its proposals on members of the public and businesses? Do you consider that Land Registry has missed or under-estimated any substantive impacts? If so, what are the nature and scale of these impacts?

Question 21

Do you think that any other approaches to improving the provision of Local Land Charge searches should be explored? If so what are these? What would be the comparative advantages and disadvantages of any such approaches?

Question 22

Do you have any further comments relating to this part of the consultation?

3. How to respond

When responding, please state whether you are responding as an individual or representing the views of an organisation. If you are responding on behalf of an organisation, please make it clear who the organisation represents by selecting the appropriate interest group on the consultation form and where applicable the size of the organisation.

You can reply to this consultation online at www.landregistry.gov.uk/public/consultations.

Under Cabinet Office (CO) guidance, consultations are now digital by default. However if you prefer, this consultation document and a fully interactive response form is available to download and complete offline. (until the consultation closes on 9 March 2014). The form can be submitted by email or by letter to:

Consultation team Central Operations Group Land Registry, Durham Office Southfield House Southfield Way Durham DH1 5TR

DX 60200 Durham (3)

Email: [email protected]

A list of those organisations specifically invited to take part in the consultation is given in Annex B. However, the consultation is open to anyone and we would also like views from professionals and interested members of the public.

Other versions of the consultation documentation can be made available on request. Please contact the team (see above).

You may make printed copies of any of the consultation documentation without seeking permission.

4. Confidentiality and data protection

Information provided in response to this consultation, including personal information, may be subject to publication or release to other parties or to disclosure in accordance with the access to information regimes (these are primarily the Freedom of Information Act 2000 (FOIA 2000), the Data Protection Act 1998 (DPA 1998) and the Environmental Information Regulations 2004 (EIR 2004). If you want information, including personal data, that you provide to be treated as confidential, please be aware that, under the FOIA 2000, there is a statutory Code of Practice with which public authorities must comply and which deals, amongst other things, with obligations of confidentiality.

In view of this it would be helpful if you could explain to us why you regard the information you have provided as confidential. If we receive a request for disclosure of the information we will take full account of your explanation, but we cannot give an assurance that confidentiality can be maintained in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not, of itself, be regarded as binding on LR.

5. Help with queries

Questions about the policy issues, access to documentation (or problems with the online consultation interface) or queries about the conduct of this consultation should be addressed to:

Consultation team Central Operations Group Land Registry, Durham Office Southfield House Southfield Way Durham DH1 5TR

DX 60200 Durham (3) Tel: 0300 0065190 Email: [email protected]

6. General background

LR is a non-ministerial government department created in 1862 to register the ownership of land in England and Wales. It is also an Executive Agency of the Department for Business Innovation and Skills (BIS) and a Trading Fund in accordance with the Government Trading Funds Act 1973. Its functions and powers are derived entirely from statute.

LR consists of a Chief Land Registrar, who is its head, and staff appointed by him. The Chief Land Registrar‘s role is to lead and manage business delivery and is accountable to Parliament. He is appointed by the Secretary of State for BIS. LR‘s powers under LRA 2002 are granted to the Chief Land Registrar.

LR‘s main function is to keep a register of title of freehold and leasehold land in England and Wales. On behalf of the Crown, it guarantees title to registered estates and interests in land. LR‘s database holds the definitive property and property ownership records of over 23.5 million registered titles. The LRA 2002 also permits LR to undertake additional activities such as the publishing of information about land in England and Wales and the provision of consultancy and advisory services about the registration of land in England and Wales or elsewhere.

As well as maintaining the register of title, LR is also responsible for the functions of the Land Charges and Agricultural Credit Departments. These functions are granted to LR by separate legislation. The Land Charges Department operates under the Land Charges Act 1972 and maintains registers of land charges, pending actions, writs and orders affecting land and other encumbrances registered against the named owners of land not registered under the LRA 2002. The Agricultural Credits Department is responsible for maintaining a register of short-term loans by banks under Part II of the Agricultural Credits Act 1928. These charges are secured on farming stock and other agricultural assets of the farmer.

As a trading fund, LR is required to ensure that its income covers all expenditure over normal operating conditions and therefore it makes no call on monies voted by Parliament. It has to demonstrate to stakeholders that it provides value for money and is delivering efficient, effective services in line with customer requirements and broader strategic objectives.

Government has put data and transparency at the heart of its agenda. When LR moved to the Department of BIS it became a member of the Public Data Group (PDG), whose principal aim is to support growth in the UK economy by efficiencies and improvements in public services through its members. This includes improving access to public data and developing new activities.

LR already offers some public data for free, such as the individual house price records of residential property sales in England and Wales that have been lodged for registration and the number and type of applications received by it, and it is committed to release more of its data. Alongside this, it provides a range of add value services, which provide property information for professionals, businesses and members of the public to help manage records, keep track of markets and identify business opportunities.

LR has also looked at combining data it holds with other bodies. For example, it has combined its address data with Environment Agency flooding data so that it is possible to get instant, concise, flood risk reports for any piece of registered land in England and Wales.

LR has also agreed to provide the Government Property Unit that sits in Cabinet Office with mapping data to help them carry out a trial with central and wider government organisations for the sharing of property information through their electronic Property Information Mapping System. The ultimate aim will be to build an Asset Register of Public Sector owned properties.

LR therefore has considerable experience, skills and expertise in the running and maintaining of registers and providing property related information, in addition to the work it has undertaken to maximise the re- use of its data for the benefit of the wider economy.

LR‘s strategy referred to in its Annual Management Plan 2013-2014 on its website has been prepared following consultation with BIS, CO and the Government Digital Service (GDS) and has been approved by its Minister. It sets out LR‘s vision ‗to be recognised as a world leader in the digital delivery of land registration services and in the management and re-use of land and property data‘ through:

efficiency – unlocking efficiency in the public and property sectors

data – maximising re-use of data for the benefit of the wider economy

assurance – extending and enhancing assurance and compliance services relating to the property market

capability – growing and maximising the benefit of its organisational capability.

However, under the LRA 2002, LR‘s powers are limited to land registration activities and therefore an extension of powers would be required to enable it to engage in new activities to play a wider role in the property sector.

For example, where information required by those in the property sector is currently held by different bodies, in different formats, with different fees and completion times, LR could in collaboration with all parties, look to streamline the service so that the data relating to all can be provided at a standardised speed, accessed through one portal, in one format and for the same fee. This would also speed up the process and reduce costs to the consumer and, in some cases, those providing the services. In some cases, holding the data centrally can also reduce the risk of material being lost or missed. Where appropriate, it would also make some data more easily accessible and transparent.

Were LR‘s powers to be extended as Government intends, LR would undertake other services, but only where it could be shown that there would be savings in time or money, including improvement in property transaction times, or where other efficiencies could be achieved for the consumer or business. Consistent with our current Business Strategy, this includes taking on new registers such as LLC where LR can drive benefits across the public sector. In doing this, the aim would always be to benefit the property market overall. Such initiatives would be subject to stakeholder engagement and full analysis of business impact including where there is potential for competition.

LR‘s primary function will remain land registration, and any additional activities it undertakes would not be allowed to detract from this. LR produces annually a report, which details whether it has met its performance indicators/objectives in its services relating to land registration. It also details its expenses and revenue made.

LR‘s Annual Report and Accounts for 2012/2013 demonstrates its commitment in maintaining service levels in its primary role of land registration, as it met all of its targets and obtained a 98 per cent customer satisfaction score. 13

Question 1.

Do you agree that there is the potential to (a) streamline and bring greater efficiencies to services in the property sector and (b) introduce new services?

Comments

7. Wider Powers

7.1 Background to Wider Powers

LR has consulted with representative groups of its customers, government departments and those who provide land and property services about the potential to diversify into land and other property services. It has also kept the Land Registry Advisory Council (LRAC), which is made up of representatives of all the regulatory and professional bodies with an interest in Land Registry‘s decision making, informed of its progress. The LRAC are, in principle, supportive of LR‘s proposal to play a wider role in the property market and to seek an extension of powers to enable it to achieve this.

Examples of the types of new services that might be explored include the following:

the provision of other land and property information. This includes the LLCR services as referred to in section 8 below;

maintaining other registers relating to properties, for example, a register of licensed landlords. Early discussion with landlord representative bodies has shown an interest for a centrally held landlord scheme. However, at present there is no proposal from the Government to take a private landlord registration scheme forward;

providing conveyancing document storage to retain certificates, guarantees and other documents. Initial research with customers and representative bodies has shown interest for a central facility to hold such documents alongside other property information.

Some of the areas where new services might be considered have been identified by stakeholders and in some cases with other government departments.

As LR‘s discussions with its customers, stakeholders, representatives of the property sector and government have indicated general support for LR taking on a wider role, it now seems appropriate to take matters forward and consult on its proposals for Wider Powers.

This part of the consultation is solely about extending the enabling powers of the LRA 2002 rather than what services LR would undertake. Where specific legislation would be required to take over or provide register services there would also need to be consultation on the detailed proposals.

7.2 Proposals for Wider Powers

7.2.1 Grant of Wider Powers

As mentioned earlier, the LR‘s powers under the LRA 2002 are limited to services relating to land registration. For LR to be able to diversify and play a fuller role in the property sector, it would need an extension of powers to enable it to: 14

provide information and register services relating to land and other property in England and Wales

provide consultancy and advisory services (including commercial) relating to land and other property in England and Wales or elsewhere

scope, bid for and develop such services.

The services provided under such powers would range from services that may be regarded as activities that are central to LR‘s status as a public body (‗public task‘) to consultancy and advisory and other commercial services. Although the main focus of new services would be in the property sector, the inclusion of ‗other property‘ means that the activities could extend to property other than land. At present, there are no specific proposals for new services in this respect, and any such activities would be undertaken only where benefits or efficiencies could be shown. As mentioned earlier, consistent with our current Business Strategy, this includes taking on new registers such as LLC where LR can drive benefits across the public sector. Such initiatives would be subject to stakeholder engagement and full analysis of business impact including where there is potential for competition

Question 2

Comments

Question 3

Do you have any suggestions as to new services Land Registry could consider?

Comments

7.2.2 Charges

Under the LRA 2002, fees for land registration applications (but not consultancy and advisory services) are prescribed by Fee Order, which is made by the Secretary of State and laid before Parliament. The LR has power to make charges for consultancy and advisory (commercial) services. Fees or charges for new services provided under extended powers will be either:

prescribed under separate legislation, for example, fees relating to LLC which would be prescribed under the LLC legislation, or

set under provisions in the LRA 2002.

LR proposes that, where charges for new services (whether public task or consultancy and advisory/commercial services) are not prescribed under separate legislation, they should be set by LR, rather than prescribed under a Fee Order for the following reasons:

it would give greater flexibility in the introduction, variation and operation of charges as and when new services are introduced

the Fee Order seems appropriate only to services relating to LR‘s main business/public task, which is maintaining the register of title to land.

Fees and charges set by LR for new services will be subject to existing ministerial approvals where that is already necessary. Furthermore all charges will be subject to HM Treasury‘s Managing Public Money as revised.

Question 4 Do you agree that Land Registry should have the power to set the charges for new services?

Comments

7.2.3 Powers to form, purchase or invest in companies

Under the LRA 2002, LR may form, purchase or invest in a company in connection with its functions in relation to historical information, land registry network, electronic settlement and consultancy and advisory services. Although this power has not been used to date, LR proposes that this provision should include activities carried out under wider powers, to allow for flexibility in the way the delivery of new services is structured.

Question 5

Do you agree that Land Registry‘s power to form, purchase or invest in companies should apply to activities carried out under Wider Powers?

Comments

7.3 Impact assessment

After careful consideration LR has decided not to publish an impact assessment in respect of the wider powers proposal. This is because this part of the consultation is about extending LR‘s enabling powers under the LRA 2002, which in themselves alone, will not impose a cost or burden on our customers or business.

Question 6

Do you have any other comments relating to this part of the consultation?

8. Local Land charges

8.1 Background to LLC

An LLC search is one of the searches undertaken when someone buys a property, be it a private house or commercial premises. These searches are normally undertaken by a conveyancer and are intended to find LA information which is relevant to a prospective buyer of a property. Information contained in an LLC search will reveal any binding obligations which may affect a potential buyer. These searches are also necessary on remortgages of properties, to ensure the lender is getting good security for their money. The main search application forms are currently LLC1 and CON29. At present LLC searches pertinent to a particular area are held by the LA responsible for that area in a register. This has resulted in 348 separate registers which vary in format.

In June 2010, the LRAC identified the lack of consistency and standardisation of LLC and CON 29 searches as a problem within the conveyancing process. LR was asked to consider whether it could resolve this problem through its extensive experience of managing property registers, providing digital services and electronic searches.

Government is committed to providing high quality, efficient digital by default public services. The consumer expects high quality, effective digital services and where public services can be delivered online, they should be. LA information should be made available to citizens and customers in a simpler, clearer and digital format. LR believes it can provide a digital service through a centralised solution.

Having undertaken extensive research with LAs, personal search companies, customers and software suppliers, LR has developed a prototype service with a number of LAs. As part of this process it has also reviewed the relevant legislation. LR has developed legislative proposals that it thinks will improve the provision of LLC searches but it recognises that further consultation is a vital step in developing ideas and securing the confidence of the wider conveyancing community.

It is considered that LR may be able to resolve these problems because of its extensive experience of managing registers and providing electronic services.

LR has support for these proposals from a range of government departments including BIS, MOJ, DCLG, CO and GDS.

These proposals support the government‘s digital by default agenda as the register will be held electronically, and will standardise fees, format and turnaround times for searches of that register. A digital LLC service will be the first step to improving the UK‘s rating for registering property within the World Bank Report – ease of doing business 2014. The UK is currently ranked 68 in the world for registering property and part of the ranking is affected by the different sources for property searches for the consumer.

This part of the consultation seeks your views on the changes that may be necessary to the LLCA 1975 in order to construct a framework that would allow LR (by means of secondary legislation, including amended LLC Rules) to provide LLC searches to a standardised speed, cost and format.

This part of the consultation does not attempt to describe any new process for conducting LLC searches in detail and LR undertakes to consult further, in advance of the secondary legislation that will be required should these current proposals proceed.

NB: at this stage LR’s proposals relate to LLC searches only.

Please see section 9 What happens Next? below in relation to LRs future plans in relation to CON29 searches.

8.1.1 Why is LR looking into this?

LR is developing these proposals because in 2010 LRAC identified that a lack of consistency and standardisation in the provision of LLC search results currently creates problems for the conveyancing sector.

The provision of LLC searches is a statutory service provided by 348 LAs across England and Wales. The quality of service currently offered varies greatly across individual LAs, as do the fees charged for this statutory service. LR‘s analysis of data arising from engagement with LAs thus far indicates charges ranging from £3 to £67.50.

Service levels are more difficult to estimate as figures relate to a ‗full search‘ (that is a search in both form LLC1 and CON29), but range from 1 day to 40 days.

The format of the result also varies from one LA to another.

LR is currently seeking to obtain authority to take over a statutory function for holding and maintaining a composite LLCR for England and Wales. This will also involve the provision of LLC searches.

On the basis that LR will obtain the authority, it will then be necessary to change LLCA 1975.

The LR‘s new LLC service will run under a cost recovery model, and it is anticipated that the running costs will achieve approximately a 20 per cent saving on the current service costs of the LLC service provided by LAs (Office of National Statistics, Local Authority Revenue Expenditure and Financing – line 460, page 32).

It is anticipated that cost savings of LR‘s new LLC service will reduce the overall expense for the end user (who is very often the citizen, normally involved in buying or remortgaging their property, but may also be a commercial user) in terms of conveyancing costs.

Question 7

Do you have any comments about the reasons to change Local Land Charge services and do you see any benefits?

8.1.2 What has happened so far?

LR has consulted with Government and has gained support across a range of government departments including BIS, MOJ, DCLG, the CO and GDS in developing these proposals.

LR has initiated an extensive research programme, and has contacted most LAs. As of 1 October 2013, it has evaluated responses from 209 of the 348 LAs (see Annex E). The process of engaging with all LAs is continuing. LR has also engaged with personal search companies, LA software suppliers and other affected stakeholders. It was during this research phase that LR established that the problem highlighted by LRAC was both valid and continuing.

LR has also engaged with the Department for Environment, Food and Rural Affairs (DEFRA), the MOJ (who hold responsibility for LLC policy) and the Information Commissioners Office (ICO) in order to investigate the implications of these proposals. These discussions will continue as LR‘s policy develops further.

LR was also able to confirm that LLCRs are currently held by LAs in a variety of formats including paper, microfiche and different electronic formats, and that this has limited the accessibility to property data for both property professionals and citizens.

Customer research was undertaken in 2011 by Synovate, an external market research company, which completed 400 telephone interviews with LR‘s customer base using a random sample of customers who had previously used LR services. The purpose of these interviews was to obtain feedback about the existing LLC service from LAs and to assess the extent to which customers would support LR in offering the new LLC service.

This was followed in 2013 by further research carried out by Ipsos Mori. This research consisted of 30 qualitative in-depth interviews and a quantitative survey consisting of 406 telephone interviews.

A report has been published in relation to the prototype service which also contains links to research that LR has conducted.

This informal consultation indicated that the current LLC service would benefit from reform.

By means of a series of events and workshops, including a Concept Viability Day run by Intellect in September 2011, and a ‗market warming day‘ run in June 2013, LR provided the opportunity to discuss its findings and some of its options with interested parties. Again, these events indicated that the current LLC service would benefit from reform.

A model for how LR could potentially provide an LLC service was developed in collaboration with GDS and industry stakeholders. LR and GDS defined a prototype for the service based upon the results of a two week workshop held with those industry stakeholders.

Since January 2013, LR has been working on a prototype with seven LAs.

For those LAs that took part, LR:

— consolidated the LLCR into one central national register held by LR (to run in tandem with the existing LLCR held by the individual LAs) — digitised (for one LA) the paper LLCR.

LR worked in parallel with the LAs in developing the central register and in processing LLC searches. The prototype concluded at the end of November 2013 and has already demonstrated LR‘s capability to hold and maintain an LLCR. This has given LR the confidence to commence consultation on the necessary legislative changes that may be required to support the future development of the service.

In order to pursue this, LR have been exploring the necessary legislative changes with DCLG, MOJ, BIS, The Welsh Government and the National Assembly for Wales.

Question 8

Do you agree with the stated perception that the current Local Land Charge services would benefit from reform?

Please provide comments to support your views

8.1.3 What are the policy objectives?

LR‘s policy objectives in proposing to develop new LLC services are:

to implement a transparent standard fee that would end the current ―postcode lottery‖ and to allow payment of fees by account to standardise and improve processing times to maintain quality and integrity of data to standardise the format of results to support the Government‘s digital by default agenda.

8.1.4 What options were considered in developing the policy?

In developing policy, LR considered various options. These are dealt with in more detail in the Impact Assessment (see Annex C) but, briefly, LR considered four basic options:

No change LR acknowledges that there has been some progress made by the market in recent years in terms of reducing costs and in delivering results in electronic form. However, it considers that there remain issues in terms of consistency of price and service, due to the fact that the current service is reliant on 348 disparate LAs. The policy objectives would therefore not be met.

Legislative enforcement It has been suggested that legislation could be used to standardise the LLCR and LLC search process, whilst keeping them under the control of LAs. Such legislation would require LAs to adhere to a common set of standards, including register and search formatting, service levels and pricing structures.

LR‘s recommended option meets these concerns but would deliver change in a way that the current 348 different LA suppliers would struggle to achieve.

LR to act as a ‘hub’ Another possibility was that LR could act as a hub for applications in a similar way to the National Land Information System. However, it was considered that this would confuse customers and bring nothing new to the market. LR would simply be in direct competition with experienced and specialised companies. It is therefore unlikely that service levels or consistency of fees would be improved, nor would it align with central government economic and digital strategies.

Preferred option Under this option, LR would assume the task of processing LLC1 searches, which is a task currently undertaken by LAs. This would require amendments to the LLCA 1975 but no changes to LR legislation would be required.

LR would build a new LLCR. In turn, LLC searches would come to LR via the existing channels and be automatically processed electronically. The research undertaken has indicated that currently only one LA issues search results without any manual intervention.

Provision would be made for access by electronic means to the unrefined data that forms the LLCR. The term ‗unrefined data‘ in this context relates to the provision of LLCR data without affirmation as to whether or not the data relates to the land or property which is the subject of the personal search or inspection. Personal search companies would then be freed from the need to attend at LAs to obtain the same information as they do at present. This will enable LR to comply with Environmental Information Regulations as regards personal searches. Fees for LLC searches would be standardised and reduced. 20

Question 9

Do you think Land Registry has considered all feasible options?

Please provide comments to support your views

8.2 Proposals arising from LR’s preferred option

In order to implement the preferred option, LR must first consider the legal position and consider what changes to LLCA 1975 may be required in order to give it the power to deliver these services.

The remainder of this consultation considers the existing LLC legislation (LLCA 1975) and in particular highlights legislation that:

would require amendment would remain unchanged would need to be introduced as a result of LR taking responsibility as the registering authority for the LLCR.

It is intended that the service will provide:

clear information improved access to electronic LLC data a single LLC registration authority electronic LLC personal search facilities standard protocols a standardised format of LLC register and results transparency of costs.

The proposals are made on the basis of the following assumptions:

LR takes on full responsibility for the keeping of the LLCR and for the provision of the results to official searches of the LLCR and that the policy aspects outlined above do not change LR staff and systems perform the day to day responsibilities of the creation and maintenance of the LLCR and the provision of official search results under delegation compliance with EIR 2004 LLC data migration will be introduced in a phased manner and by notice. LR will not assume the current role of LAs as originating authorities and will not be responsible for validating applications/entries to the LLCR overall responsibility for policy and legislation will remain with MOJ and rule making powers will remain with the Lord Chancellor.

8.2.1 Definition of LLCs LLCs are currently defined in s.1 and s.2 of the LLCA 1975 by means of a list of inclusions and exclusions. Whilst LR does not intend to alter the essence of what an LLC is, it would be preferable for there to be a simplified definition.

In its simplest terms, and apart from cases where a charge or other matter is expressly made an LLC by statute, an LLC must be restrictive or prohibitive, and binding on successive owners of the affected property. Focusing on these aspects rather than listing all possible inclusions and exclusions should provide a simpler definition. LR believes there is a need for a clear and comprehensive definition to avoid any future difficulty in interpretation. However, it also recognises the need to be mindful when considering any proposed new definition, of avoiding any unintended consequences - such as creating new classes of LLCs that are not LLCs at present, simply because they fit within a new definition.

Proposal

It is proposed that LR should investigate whether the current definition of an LLC in s.1 of the LLCA 1975 can be simplified.

Question 10

Do you agree that the definition of a Local Land Charge requires simplification?

Please provide comments to support your views

8.2.2 LR as a registering authority

To achieve it‘s policy goals, LR believes it is necessary for it to become sole registering authority for all LLCs in England and Wales. This would mean replacing s.3 of the current LLCA 1975 with provisions for LR to have responsibility for the creation and maintenance of the LLCR.

LR will also need to acquire all associated registration powers for LLCs as well as ancillary powers to make notices and orders as required. Such notices and orders would be necessary not only for the conduct of matters related to the business of LLC registration, but to enable LR to react to new demands from the data community without the need to amend existing legislation, which can be costly in both time and money. The ability to make such notices and orders will also assist in ensuring LR‘s overall aims align with broader Government aims to benefit the wider economy.

By becoming the sole registering authority for LLC‘s, LR will deregulate the process by providing a single channel for obtaining LLC1 results. Currently not all LLC records held by LAs are in digital format. As the single registering authority, LR will be able to provide easy access to digital LLC information, with efficient service delivery times for a public service.

As part of this change in role, the changes to legislation will require:

inclusion of a power to delegate administrative duties and the day-to-day running of the new LLC services to LR staff. This will ensure that the function may be carried out by any member of LR who is so authorised LR will digitise existing records for LLCR for a limited period going back 15 years following the coming into force of the amendments of the LLCA indemnity for the actions of staff ancillary powers to publish information about LLCs in England and Wales. These ancillary powers will be similar to those that LR currently has in relation to land, as provided in ss 104 & 105 of the LRA 2002. These powers will enable LR to provide advice and consult, as it may wish to publish information where there is legitimate public interest or provide for the provision of consultancy or advisory services. The terms on which such services are provided will be similar to the terms under which services are provided under s105 of the LRA 2002, which are as the Chief Land Registrar thinks fit.

Proposal It is proposed to replace existing sections 3, 4 and 5 of LLCA 1975 with a new section to reflect the fact that LR will become sole registering authority for all LLCs in England and Wales. Additionally, to include powers to publish information, provide advice and to consult, as LR may wish to publish information where there is legitimate public interest or provide for the provision of consultancy or advisory services.

Question 11

Do you agree that sections 3, 4, and 5 of the Local Land Charges Act 1975 should be amended as proposed?

Please provide comments to support your views.

Proposal

It is proposed that LR will provide LLC searches for a limited period going back 15 years.

Question 12

Do you agree that Land Registry will provide Local Land Charge searches for a limited period going back 15 years?

Please provide comments to support your view.

8.2.3 Personal and official searches of the register

It is proposed that ss 8 and 9 of the LLCA 1975 are re-drafted under one section to cover both personal and official searches of the LLCR and should include details in relation to the following:

applications for official searches and requests for personal searches to be submitted electronically to LR. Details of application requirements will be outlined in ancillary rules searches will be of the whole of the LLCR for the relevant property. The register is to be held digitally. There would no longer be a register in 12 parts. This would avoid difficulties in determining under which part a charge should be registered and remove the need for searches of part of the register arrangements for personal search facilities in compliance with EIR 2004 requirements.

Question 13

Do you agree that sections 8 and 9 of the Local Land Charges Act 1975 should be amended as proposed?

Please provide comments to support your views.

8.2.4 Change of role for current registering authorities

The proposals will necessitate a change of role for authorities who have previously registered LLCs. In the majority of cases, these registering authorities would become originating authorities with the responsibility for applying to register LLCs. Protocols between LR and the originating authorities would be required to ensure satisfactory standards of service.

LAs are already included in the definition of ‗originating authority‘ (s5(4) LLCA 1975), so there will be no need to extend the definition in the LLCA 1975 to provide for this change of role. The obligation on the originating authority to apply to register the LLC and details of how to apply will be subject to ancillary rules and/or any agreed service level protocol. The changes are therefore covered in section 8.2.6 Provision for a service level protocol below.

8.2.5 Relationship between LR as registering authority and the originating authorities

LR will take over all the LLC registration functions of the LAs as the current registering authorities.

The LLCR would remain a ‗notice‘ register in that it will continue to provide notice of the existence of a LLC. Registration does not affect the validity of the charge itself and it binds an owner of the affected land in any event, whether registered or not.

LR will assume responsibility for:

keeping the LLCR and an index for tracing entries (s3(2) LLCA 1975), but only in electronic form checking the suitability of applications. As an LLC is effective when created rather than when registered, LR would be verifying applications only in terms of whether they should be entered in the register as an LLC entering and cancelling LLCs in and from the register, on the basis of applications received from originating authorities. LR should have a power to cancel or amend entries of its own volition where it deems it appropriate. Details of how and if this power is exercised would be covered in ancillary rules applications for cancellation of LLCs pursuant to a court order, provision for which will be retained; amending the LLCR. This similarly would be on application from originating authorities or of the LR‘s own volition issuing official search results paying compensation (ss.10 and 11 LLCA 1975). It is envisaged that the same compensation arrangements and division of responsibility between registering and originating authority will remain. It is also anticipated that there will be no change to the entitlement of complainants to compensation (although LR recommends that the definition of those entitled should be simplified as far as possible).

Proposal

LR will take over all the LLC registration functions of the LAs as the current registering authorities.

Question 14

Should Land Registry take over the Local Land Charge registration functions of local authorities?

Please provide comments to support your views.

8.2.6 Provision for a service level protocol

In view of the proposal to impose a statutory duty on originating authorities to register LLCs, LR needs to enter into a service level protocol with LAs in order to standardise the level of service. The protocol would cover matters listed below including relevant time periods, methods of application and consequences of non-compliance.

LR is proposing to include an enabling power to provide for a service level protocol which would give a general power to prescribe the form of agreements, the enforceability of the agreement and the 24

consequences of non-compliance. This approach has the advantage of providing flexibility for future amendments without requiring changes to legislation.

These service level protocols could deal with such matters as;

time limits; method of application; responsibility for any necessary notification regarding the cancellation or amendment of charges; rejection/requisition policies; implication and consequences of non-compliance including any financial penalties; adjudication in the event of dispute; originating authorities who are not LAs; outline of sanctions DCLG would impose if LAs fail to comply with the protocols.

Effectively the service level protocol supports the registration process and the compensation provisions. For example, the service level protocol will dictate what ‗timely manner‘ means for the purposes of recourse and compensation payments in line with the current s10(5) of the LLCA 1975.

It should be noted that the contents of any service level protocol will require agreement by DCLG and the LGA and any other interested parties.

Proposal

LR proposes that there should be service level protocols to support the registration process.

Question 15

Can you suggest other areas that could be considered under the proposed protocols?

8.2.7 Record of receipt of applications

In order to assist with the registration process and to allow proper records to be kept of the creation of an LLC, LR will need to keep a record of relevant dates. This will include the date that the LLC arises, the date of receipt of the application and the date of registration. The date of registration of an LLC is the date the charge is entered onto the LLCR.

Proposal

LR proposes to keep a record as deemed appropriate, to include the date that the LLC arises, date of receipt of the application and the date of registration.

Question 16

Do you agree that a record of appropriate dates relating to the creation of a Local Land Charge will be required in order that Land Registry can accurately maintain a Local Land Charges Register?

Please provide comments to support your views.

8.2.8 Indemnity and accountability

LR proposes that the relationship between the registering authority and search applicants would be similar to that already provided for in LLCA 1975. It would be supported by the terms of the service level protocol referred to above.

This means that LR would be responsible in the first instance for payment of any valid claim for compensation. Where the claim flows from a mistake made by an originating authority, LR would have a right to recover the amount paid from that authority.

LR does not propose that there should be a state guarantee akin to that under LRA 2002, because the LLCR is merely a ‗notice‘ register and does not confer or confirm validity in respect of an LLC. LLCs will bind a buyer of the affected property whether or not notice of the charge appears in the LLCR.

Proposal

LR proposes to retain the option to insure against claims for compensation.

Question 17

Do you agree that Land Registry should retain the option to insure against claims and provide compensation when a claim is valid?

Please provide comments to support your views.

8.2.9 Fees

Under the Government of Wales Act 2006, whilst the LLC framework is not a devolved matter, the power to set fees is devolved. To achieve the benefit of standardised fees, LR‘s preferred route would be for legislation in this area to cover both the framework and fees.

LR will liaise with the Welsh Government to seek its consent in respect of the legislation as to fees.

8.3 Impact Assessment

The impact of the options, considered in monetary and other terms, is dealt with in more detail in the impact assessment referred to in Annex C. LR will work with the industry to quantify those benefits.

Question 18

Please provide comments to support your views.

Question 19

Do you think you will need to make changes to your internal processes to make LLC1 search applications through LR channels?

Please provide comments to support your views.

Question 20

Question 21

Question 22

Do you have any further comments relating to this part of the consultation?

9. What happens next?

LR will publish a formal response to consultation as soon as possible after the consultation ends setting out the views expressed and the reasons for the final decisions taken. If LR cannot publish a full response within three months, it will in any event publish a summary of responses and further details of when a formal response will be made available.

Assuming these proposals proceed, LR anticipates the need for further consultation at the time that ancillary rules are drawn up in relation to LLC searches. Any further legislative changes and changes to practice arising out of these consultations will be advertised at that time.

LR recognises the relationship between the provision of LLC official search results alongside related LA CON29 information. However, CON29 information does not form part of this consultation. This would be the subject of a separate consultation to be issued at the appropriate time.

Annex A: Consultation principles

The principles that Government departments and other public bodies should adopt for engaging stakeholders when developing policy and legislation are set out in the consultation principles, which can be found at:

Cabinet Office: Consultation principles: guidance (5 November 2013).

Annex B: List of individuals/organisations consulted

Government and others

Assets Recovery Agency Bank of England BIS BIS – ShEx (Shareholder Executive) Cabinet Office Coal Authority Companies House Crown Prosecution Service DCLG DECC - Dept of Energy & Climate Change DEFRA Department for Work and Pensions District Council Network English Partnerships GDS HM Courts Service HM Treasury Home Office Homes & Communities Agency Improvement & Development Agency Independent Complaints Reviewer ICO Insolvency Service Land Data LGA Local Land Charges Institute MOJ Ofcom Office of Fair Trading The Land Registration Division, Property Chamber, First–tier Tribunal Ordnance Survey Registers of Scotland Searches Working Group of the Law Society Small Business Service SOLACE - Society of Local Authority Chief Executives & Senior Managers Tenant Services Authority The National Assembly for Wales Valuation Office Agency

Regulatory and advisory bodies

Age UK Agricultural Law Association Association of British Insurers Association of Residential Managing Agents The Bar Council British Bankers Association British Property Federation British Retail Consortium Building Societies Association

Chancery Bar Association Charities‘ Property Association Charity Commission Chartered Institute of Legal Executives Citizens Advice College of Law Commercial Real Estate Legal Association Confederation of British Industry Consumer Focus Conveyancing Association Council for Licensed Conveyancers Council of Mortgage Lenders Country Land & Business Association Direct Conveyancing Association Federation of Small Businesses Financial Ombudsman Service Dr. Charles Harpum Home Builders‘ Federation Insolvency Practitioners‘ Association Institute of Chartered Accountants in England and Wales Institute of Chartered Secretaries and Administrators Intermediary Mortgage Lenders Association Law Commission Legal Services Board The Law Society Law Society of Scotland Legal Software Suppliers Association LGA London Property Support Lawyers National Association of Citizens Advice Bureaux National Association of Estate Agents National Consumer Council National Housing Federation National Federation of Property Professionals Notaries Society Property Litigation Association Royal Institution of Chartered Surveyors The Scottish Law Commission Society for Computers and Law Society of Asian Lawyers Society of Legal Scholars Society of Licensed Conveyancers Society of Property Researchers Society of Trust & Estate Practitioners Society of Visually Impaired Lawyers Solicitors Benevolent Association Solicitors Regulation Authority Which?

Trade bodies

CoPSO - Council of Property Search Organisations IPSA - Association of Independent Personal Search Agents Legal Software Suppliers Association NLIS OYEZ 30

Suppliers (software/scanning/digitisation)

1Spatial Civica DEF EDM EMC ESRI Global ECM Solutions Groundsure IBM Idox Group Landmark Northgate Oracle Restore Scan Terraquest TNT

Search companies

Anglian Water/Geodesys Conveyancing Data Services Decision Insight Information Group Groundsure One Search Direct PSG Franchising Services Searches UK Severn Trent Water (Severn Trent Searches) Stanley Davis Group Thames Water TM Solutions York Place

Customer user group

Beaumont Legal Dickinson Wood Fasttrac Girlings GM Wilson Hartley & Worstenholme HLW Keeble Hawson Jordans Ridley & Hall Taylor & Emmett Trethowans

Local authorities

Invitations to take part in the consultation have also been issued to the Chief Executive‘s Office at each LA in England and Wales.

Annex C: Impact assessment for ‘Land Registry and Local Land Charges’

View or download our Impact Assessment from the online consultation.

Annex D: Glossary of abbreviations and initials

BIS The Department for Business, Innovation and Skills CO Cabinet Office DCLG The Department for Communities and Local Government DEFRA Department for Environment, Food and Rural Affairs DPA 1998 Data Protection Act 1998 EIR 2004 Environmental Impact Regulations 2004 FOIA 2000 Freedom of Information Act 2000 GDS Government Digital Service ICO Information Commissioner‘s Office IT Information Technology LA Local Authority LRA 2002 Land Registration Act 2002 LGA Local Government Association LLC Local Land Charges LLCA1975 Local Land Charges Act 1975 LLCR Local Land Charges Register LR Land Registry LRAC Land Registry Advisory Council MOJ Ministry of Justice NLIS National Land Information Service

Annex E: Engagement with local authorities

The figures below represent analysis of LR engagement activities with LAs as of 1 October 2013. The figures relate to 209 individual authorities. This engagement is ongoing.

Local authority engagement

Block 1% Unresponsive 8% Champion Hostile 14% 4%

Apprehensive 11%

Positive 34%

Neutral 28%

Current sign- No. of LAs As a % of those LAs up Level that LR has evaluated

Champion Prototype – model LAs plus those that have 30 14% completed and returned their questionnaire voluntarily with an offer of assistance

Positive LAs who have confirmed that they think the 72 34% prototype is a good idea

Neutral Indifferent LAs 58 28%

Apprehensive LAs that will communicate with LR but do not 22 11% want to be involved as yet

Hostile LAs that refuse to communicate with LR 8 4%

Block LAs that are actively trying to block LR‘s 3 1% engagement

Unresponsive Not necessarily negative or ‗blockers‘ but 16 8% LAs will not speak to LR for another reason e.g. they are too busy