Why privatising the Land Registry is wrong
Former Chief Land Registrar John Manthorpe explains why land registration needs to stay public.
The Government’s Annual Spending Review, announced by the Chancellor of the Exchequer on 25th November 2015, included a proposal to “consult on options to move operations of the Land Registry to the private sector from 2017”.
The Government published its consultation document on 24th March. Less than two years ago a similar and wide ranging government consultation was conducted by the Department of Business, Innovation and Skills (BIS). This led to an overwhelming rejection of such a proposal from a wide range of stakeholders. Consultees made clear that the Land Registry must remain as a public department of Government. Despite this informed response the Government are now to renew the consultation – presumably disregarding the clear views expressed last year from those who use and depend on the Land Registry’s services.
Constitutional position in Government – land registration ‘an act of sovereignty’
Land registration is the exercise by government under statute of the impartial control and development of an adjudicatory system which enables the ready creation, extinguishment and exchange of private interests in land under the law. It is the positive choice of government to provide and create certainty and security for the citizen, for business, and for public authorities and financial institutions. By establishing trust and confidence in title it promotes private ownership, secured lending and economic development. It does this by reserving to itself, on behalf of the Crown and under the law, the power to grant, and to rectify, title and to maintain a single authoritative and guaranteed register of legal interests in land. Where land is registered the register forms the only title to land recognized by law.
The act of registration has been described as an “act of sovereignty” inasmuch as it is in exercise of its sovereign power that the State declares title after examination to be absolute and makes it valid against the world.
The Registry’s independence from commercial or specialised interests is essential to the trust and reliance placed on its activities. It would not be possible for actual or perceived impartiality to be maintained or public confidence sustained, if a private corporation or institution (particularly if such a body had conveyancing, financial or land holding functions) were to assume responsibility for the granting of legal estates in land and the maintenance of a public register
The new consultation can be said to fall into a continuous series of Royal Commissions, Inquiries and Reviews that have been conducted over three centuries. This includes the land registration statutes enacted by Parliament since 1862 (most recently the Land Registration Act of 2002) but also specific government sponsored reviews of the Civil Service which have included reviews of the organisation and financing of HM Land Registry. All of these reasserted unequivocally that the Land Registry must remain as a public department of Government.
The Land Registry has been a public department of Government since its establishment 153 years ago in 1862. For 149 years it was a legal department of the Ministry of Justice (and its predecessor departments). The Chief Land Registrar, as Head of the Department and full Accounting Officer, was directly accountable to the Lord Chancellor. In 2012 it transferred to (BIS) with the Chief Land Registrar now accountable to the Minister at BIS.
What the Land Registry does
In understanding why successive administrations have been so clear about the Land Registry’s position as a public department of Government it is helpful to restate what the Registry actually does – as set out in the following paragraphs.
There is, every day, a massive movement across the country in interests in land. These can arise from sale and purchase, inheritance, mortgage, discharges, leases, restrictions, matrimonial and family matters. In addition bankruptcies, repossessions, the protection of third party rights and Orders of the Court relating to land rights require protection by registration. The Registry handles all house sales activated by Estate Agents, all sales and purchases handled by conveyancers and every secured loan generated by Banks, Building Societies and other lenders. Because it is constantly maintained, and records the priority of all pending land transactions in England and Wales, the land register stands to give authoritative and guaranteed notice to all. This includes those who deal with land occasionally (e.g. purchasers) and those who deal regularly (e.g. lending institutions). It is the maintenance of the national land register which enables vendors to demonstrate proof of ownership, and purchasers and lenders to carry through their intentions to contract and to completion safely and simply.
None of this massive and daily movement of guaranteed interests in land, between citizens, business, public bodies and financial institutions, on which the market economy depends, could function without an impartial and trusted system of land registration
The input to this dynamic land register is the constant flow of agreements, contracts, deeds and documents – freely made between people, banks, institutions, local and central government and the Crown – in any combination and at any time. Decisions are made, contracts are agreed, registration is effected. The ever changing legal relationship of land and people is constantly and instantly reflected in a public place. What would otherwise be hidden is synthesized into a common, guaranteed and public record open to all. Security, confidence, transparency, choice – all become possible. Publicly registered land rights are ‘good against the world’. Individually they protect the interests of the registered owner; together they constitute the underwritten record of the collective wealth of the country. Around the world a trusted system of land registration is central to social stability and economic success
The secured credit activity of Banks, Building Societies and other financial institutions depend on the guarantees provided by the Land Registry. These guarantees and reserved priorities are essential before any decision can be made to generate a secured loan or to go to contract. All lenders secure their power of sale in the event of default by substantive registration of their mortgages.
On every transaction the Registry is responsible, on registration, for the validation of documentation and for ensuring that conveyances, transfers, mortgages etc, are properly executed and legally effective. The Registry must verify that an owner has the power to sell and that the transaction is made having regard to any prior claims by third parties affecting the property. This constant curative process ensures, before the legal estate passes, that the interests of all parties affected by the transaction are properly considered and that any necessary Notices have been served on those entitled to receive them. Quite apart from ensuring that any legitimate interests are protected the Registry is able to resolve potential problems, disputes or ambiguities at an early stage so avoiding, as far as possible, future dispute and litigation.
It is this which is the core and dominant work of the Land Registry. It is this which ensures the continuing existence of an up to date, trusted, register of legal interests in land. It is this central task of the Registry that employs the majority of its staff, many with highly developed professional and specialist skills. It is this that provides the essential and statutory machinery that enables a massive, and continual, movement in land interests to take place with confidence. Land Registry and its specialist staff
Maintaining the land register in the fluctuating and sometimes complex, competitive property market requires the exercise of sound risk taking judgement by the Registry’s staff drawing on long standing practical experience and the interpretation of primary and subordinate legislation. Their decisions have to be visibly impartial and free from conflicts of interest, dealing as they do with the sometime competing and contrary interests of individuals, neighbours, financial institutions, private companies and public bodies.
Self financing – no cost to the exchequer
The Land Registry is self-financing operating at no cost to the public purse. It has an excellent record of holding and reducing its costs, and its fees to customers. It pays an annual dividend to the Exchequer. It is highly regarded by those who depend on it as a provider of trusted, prompt services.
Land registration is not an activity that any responsible Government can transfer to the private sector.
The Land Registry is a national treasure – sign the petition to keep it that way.