Gemma Stephenson and Georgie Bright, in our Commercial Property team, explain the difference between voluntary and compulsory first registration of unregistered land.
Registering land has not always been a legal requirement, in fact it was not until the Transfer Act came into effect in 1897 that registration became compulsory in the County of London. This Act was then followed by the Land Registration Act in 1925 but because areas became subject to compulsory registration at different times it was not until 1990 that land registration became compulsory across the whole of England and Wales. It is now estimated that only 15% of properties in England and Wales remain unregistered.
What is first registration? (Land Registration Act 2002)
First registration is the process of collating all documents relating to the unregistered title of a property and adding them to an online register at the Land Registry. A specific ‘title number’ will be assigned to the property and a title plan will be generated showing the boundaries of the property. Once this online register has been created, most transactions involving the property will be noted against the title number, allowing people to see all title matters affecting the property in one place.
What triggers compulsory first registration?
Compulsory registration occurs when the owner has not chosen to register their property but is compelled to do so by a trigger event. The events which trigger compulsory first registration include:
- When a freehold property is purchased
- When a freehold property is inherited or gifted
- The granting of a lease that has a term of over 7 years, or a reversionary lease, which is a lease that is granted but takes effect more than 3 months in the future
- The creation of a first legal mortgage over the property
What are the benefits of voluntary first registration?
One benefit of voluntary first registration is the difference in the fee which the Land Registry charges to deal with the registration. Voluntary first registration has a minimum 25% fee reduction. For example, if the property is valued between £200,001 - £500,000 then it will cost £250 to register it voluntarily, however if there is a triggering event and it must be registered, then it will cost £330. Once registered the owner will have the benefit of simpler title information, due to the fact it is all in one online register. Additionally, having the property registered will offer more protection against someone claiming the property through adverse possession. It may also make the property easier to sell as it will speed up and make simpler the sale process.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
