Will Land Registry privatisation affect homeowners?

Mon 17 Feb 2014 by Lorraine Imhoff

Written by Lorraine Imhoff

Government plans for a reorganisation of the Land Registry could lead to much of its work being privatised. Will this benefit ordinary homeowners and property buyers, or could it lead to increased charges and a less efficient service?

Most homeowners will have little or no knowledge of the functions of the Land Registry. Apart from being asked to pay a 'registration fee' as part of the conveyancing costs buyers will usually have no direct contact with the Registry, as Solicitors normally handle registration applications.

Yet the Land Registry plays an important part in the property market. 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. On behalf of the Crown, it guarantees title to registered properties.

When any land or property changes hands the transfer has to be registered. Mortgages also have to be registered, as well as other legal matters affecting a property or its ownership.

Will the Land Registry be better in the hands of a private company or a Civil Service department?

An efficient and inexpensive Registry is an essential part of property Conveyancing. But will this be better achieved by a privatised company or a Civil Service department?

The Registry was first established over 150 years ago. It operated for most of that time as part of the general Civil Service. But in recent years it has become a 'trading fund' agency within the Department for Business Innovation and Skills, responsible for its own budget.

The Land Registry as it now exists has made great strides in recent years to improve efficiency and cut costs. It has computerised the register and done much to enable solicitors and other customers to access its services on-line. This has enabled it to drastically cut its fees recently for most property transfers.

However the government seems intent on privatising as much as it can. It has now published plans for a proposed reorganisation of the Land Registry. These include setting up a separate service-delivery company to carry out the day-to-day work of the Registry.

This company could remain in government ownership but it could also be sold off to private owners. In any case the staff will cease to be civil servants.

It is proposed to set up a separate Office of the Chief Land Registrar (“OCLR”) which would be retained in Government. The OCLR would primarily perform regulatory and fee-setting functions to ensure that customers’ interests continue to be protected, while the Land Registry service delivery company would focus on the delivery of land and property services on behalf of the OCLR.

It is difficult to see how these proposals would benefit ordinary buyers to any great extent. At the heart of the proposed change lies the government's desire to reduce the number of civil servants. But merely transferring existing staff to  a new company as is proposed will surely not make much difference to operating costs.

Expanding the services of the Registry would not benefit home buyers

In recent years the Registry seems to be set on branching out into other areas of work. It already sells much information obtained from the register to commercial companies and is expanding the types of information which it sells.

But it has also announced plans to take over the registration of local land charges from local councils. This is ostensibly so that it can provide search information to buyers' solicitors more quickly than councils do at present.

Local land charges are various legal matters that a local authority can register against a property – common examples are planning restrictions and improvement grants. These charges will be binding on subsequent owners, so solicitors have to make a search when acting on behalf of buyers.

But the local land charges search is made as part of a much wider set of enquiries usually known as a 'local search.' The Land Registry would not be able to deal with such enquiries, so it would still be necessary to make a local search even if the Land Registry dealt with the land charges part of the search. So there would be no time-saving and it could actually cost more.

This looks like just one example of unnecessary 'empire building' and there may be others planned. The government proposals suggest the possibility of the new company providing other services, although these are not specified.

Is this what anyone wants? Commercial companies normally try to expand their business and maximise their profits. But surely the Land Registry should be not be run to make a profit, nor should it try to carry out services beyond its present remit. Far better to concentrate on doing its present job efficiently.

The Registry's core business is always going to be the registration of property titles and subsequent transfers and other dealings. So the volume of its business will be dependent upon the number of property sales and mortgages taking place.

Is anyone going to be persuaded to rush out and buy a house just because the registry has got a special offer this week on registration fees? Will a privatised Registry try to set up as an estate agency or offer conveyancing or surveying services?

Privatisation does not necessarily deliver benefits to consumers

We have already seen many cases where outsourcing central or local government work to private companies leads to a worse service and even costs more in the long run. The privatisation of gas and electricity companies has led to higher bills for ordinary consumers while company shareholders benefit from increased profits.

The Land Registry may not be in the same league, but it does play an important part in the property market. Far better to keep it as a neutral government agency than to allow it to become a small part of some commercial enterprise geared to make as much profit from its 'customers' as possible.

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