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» Problem No 1: The law is too complicated and out of date
» Problem No 2: Some valuable property rights cannot be registered
» Problem No 3: Registration gives no extra protection against squatters
» Problem No 4: Too many rights over land do not have to be registered
» Overview
This Regulatory Impact Assessment supports the Land Registration Bill.
The Land Registration Bill will:
Several of the measures of the Bill will have an impact on businesses and the voluntary sector. Detailed information on the impact on businesses and the voluntary sector is set out in the remainder of this paper.
I have read the Regulatory Impact Assessment and I am satisfied that the benefits justify the costs.
Signed by the responsible Minister:Irvine of Lairg
Lord Chancellor
21 June 2001
Paul Hughes
Land Law Division
Lord Chancellor's Department
Southside
105 Victoria Street
London SW1E 6QT
Telephone 020-7210 1228
e-mail: Paul Hughes
In England and Wales the process of buying and selling of land, particularly homes, is much criticised for being slow, wasteful, complicated and stressful. The process falls into five main stages: marketing; investigation; contract; completion and registration. The first stage is usually led by the selling agent; the next three stages by lawyers; and the final stage by the Land Registry. In this assessment we are concerned with the second to fifth stages.
Our objective is to maximise the land registration system's contribution to the improvement of the conveyancing process; the property market and the wider economy.
The principal problems to be overcome are that:
The risk of failing to make changes is that an opportunity to improve the speed and transparency of the conveyancing process significantly will be lost.
Landowners (including homeowners, businesses, farmers, charities and the public sector) and prospective landowners will be affected. As also will those who lend on the security of land and those who own or claim rights over land. The changes will also affect those who trade in information about property. Most affected, however, on a day to day basis, will be conveyancing professionals, such as solicitors and licensed conveyancers, and the Land Registry.
The following figures give some indication of the current scale and importance of land registration.
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There are about 15 million freehold and 3 million leasehold registered titles. These are worth about £ 2,000 billion. There are about 3 million changes of ownership each year including 1 million residential sales. |
The land registration system is administered by Land Registry. It has its headquarters in London and 24 district land registries. It employs the equivalent of about 8,000 full time staff. The Land Registry has already invested heavily in information technology and the provision of electronic services.
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At the end of 2000, 96.4% of all registered titles were held in computerised form (100% by 2003). By July 2003 all documents referred to on the register will be available electronically. The electronic notification of discharge of a mortgage service started in 1999 now carries about 48,000 notifications a month. Land Registry Direct (a secure extranet based subscriber service) launched in 2000 now generates £500,000 of fee income per month. |
Residential conveyancing is more efficient than unregistered conveyancing.
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Example: Transaction Time We estimate that investigation and proof of title by seller to buyer in an average freehold sale takes probably about two hours less per transaction in registered than unregistered conveyancing. Assuming the average transaction legal fees are about £450 for about six hours work (i.e.£75 per hour), this produces a saving of £150 per transaction. |
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Example: Cost Of Loss Of Deeds Estimates indicate that the average cost of re-assembling an unregistered title in the event of loss of the deeds (for example by fire or flood) is about £800. Replacing a registered title by contrast would cost in the region of £50. As the Land Registry receives some 20,000 applications each year for replacement certificates, the difference in replacement cost is about £15 million per annum. |
The cumulative effect of these benefits is to make the property market more efficient and to make the interests in land easier to buy, sell and mortgage. This is the reason why public policy has for the last seventy five years and more favoured conversion to registered land.
In this assessment of the regulatory impact of various possible changes to the land registration system we will first consider each of the four problems mentioned above and then the issues relating to the development of electronic conveyancing. Finally, we will provide an overall assessment of the impact of the possible changes. In each case, we will first describe the problem and the options for change and then consider what the benefits and costs might be.
The Land Registration Act 1925 was poorly drafted at a time when registered land was considered to be little more than a procedural adjunct to unregistered land. The underlying philosophy was therefore to minimise differences between the two systems. As registered land is now predominant and electronic conveyancing is becoming a reality, a distinct system of registered land law can be developed. The key features of a modern registration-oriented system will be that it should be possible to investigate title to land almost entirely on line and that registration is simultaneous with the creation or transfer of ownership so that ownership depends upon registration.
The options are to leave the Act in its present form or to seek to bring it up to date by clarifying and simplifying its concepts, its language, its structure and its procedures. This could be achieved in a wholesale or piecemeal fashion. The Law Commission recommended a comprehensive overhaul of the system as long ago as 1987.
Benefits
Benefits - updating the law
The modernisation and simplification of the 1925 Act would provide the very significant benefit of a clearer and more accessible system of regulation to all users. The benefits of better law would fall very widely. Landowners and the owners of rights over land could understand their legal position more readily. If they needed advice it could be given more readily and with greater certainty . and therefore more cheaply. In turn disputes could be more easily settled or adjudicated, if not avoided altogether.
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Solicitors fee income in 1998
If even 1% of these costs could be saved by clearer law, the saving is obviously still very significant. |
Putting the law on a more registration-oriented approach will help deliver the solutions to the other problems to be discussed below. It will also support the growing application of information technology to the conveyancing process.
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The Land Registry estimates that it spends some £3.2 million in answering about 1.8 million enquiries each year. If, as seems reasonable, 'better law' could reduce the number of enquires and the time taken to advise on those that remain by even say 10%, the Registry will save some £320,000 annually. The enquirers themselves . both professionals and lay persons - will of course also save a similar proportion of the cost of their enquiries. |
Benefits - do nothing
Leaving the law unreformed will avoid the need to adapt to a new system. The costs of adapting to the change would be saved.
Costs
Costs . updating the law
The principal cost of creating a modern code of land registration law to replace the present structure is the one off cost that all users will have to familiarise themselves with the new system.
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The Land Registry estimate that it would cost it upto about £1.6 million to implement the changes under consideration. Even allowing for no other saving, this could be recouped in five years from savings on enquiries alone. |
Costs . no change
The main cost of preserving the present system is the loss of an opportunity to reduce the costs inflicted by the system on its users. Costs that will increase as the register increases in size.
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At present rates the register is expected to grow by about 20% in the next nine years. This could thereafter produce another 360,000 enquiries each year. The estimated additional cost to the Land Registry without 'better law' would be £64,000 annually. |
Conclusion
Clear modern law will benefit the users and the providers of the land registration system. The Land Registry should recoup its additional outlay in a relatively short period. Other users should gain proportionate benefits. The benefit of new law should outweigh the cost of change.
Registered conveyancing is basically restricted to freeholds and long leases (i.e. those over 21 years in length). The issue is whether the 21 year limit should be lowered.
For this purpose, short leases are those granted for a fixed term of 21 years or less (excluding however those for three years or less as they can be granted orally). There are estimated to be about three million short leases in total. About 45,000 are granted or sold each year. Of these, about 6,500 are commercial leases. The average new commercial lease term is now about fifteen years long.
Types of Leases
To date land usage has not been a determining feature in defining liability for first registration. A case might be made for requiring only short commercial leases to be registrable on the basis that the short lease residential market is generally less valuable on a transaction by transaction basis. The disadvantage of making such a distinction is that the registration system would become more complicated and less useful . information about residential leases is significant to prospective buyers. Also, use is not an absolute guide to value. Lower value leases would attract lower registration fees in any event thereby reducing the burden on them.
Benefits
We have estimated that a registered freehold transaction might save 2 hours over an equivalent unregistered transaction. Short term leases give rise to slightly different considerations from general conveyancing but in round terms, assuming the incoming tenant wished to investigate the landlord's title as well as the selling tenant's title, the savings could be greater.
| Leasehold transactions: Estimated time saved per registered transaction: Hours saved: at, say, £75 per hour Total saving per annum: |
45,000 2 1/2 hours 112,500 hours £8,437,500 |
Note however that in practice some reversionary titles would already be registered and so investigation would be quicker. On the other hand, additional savings would be made in failed transactions.
If only all commercial leases were registrable the savings would still be significant.
| Commercial leases: 2 1/2 hours saved per transaction: at ,say, £150 per hour Total saving |
6,500 112,500 hours £1,625,000 per annum |
The exclusion of short commercial leases from the register means that the register is of very little benefit to those involved in dealings with much commercial property. Providing accurate title information publicly will help to make the market more transparent. Registration could encourage standard presentation of the key features of leases making comparison easier.
At present short leases bind the owner of a property even if they are not on the register. Registration will ensure they are apparent and readily discoverable.
Registration of leases will also enable them to take advantage of electronic conveyancing.
No change
The benefit of leaving matters as they are is that those familiar with the system need not change their current practices.
Costs
Extending registration
The most obvious general cost for landowners and lenders is that registration requires an application to be prepared and land registration fees to be paid for the initial registration and subsequent dealings. Fees will also be payable for copies of the register and so on. Historically the Registry reduced its fees by over 40% over the 1990s. The development of electronic conveyancing may allow further reduction. The additional cost of requiring shorter leases to be registered could be:
| Assuming a 3-year minimum term Leases: 45,000 Typical registration fee: £70 Preparation of application: £37.50 Cost per lease: £107.50 Total cost: £4,837,500 |
Taking commercial short leases only Commercial leases: 6,500 Typical registration fee: £100 Preparation of application: £50 Total cost: £975,000 |
Any newly registrable interests will benefit from the state guarantee. The opportunity for new claims will therefore increase. However, the level of payments on indemnity is historically low, averaging only £1,712,635 over the period 1990/1 to 1999/2000. There is no reason to expect a sudden increase.
No change
The cost of leaving shorter leases unregistrable will be the loss of the benefits of registration.
Comparison
| Assuming a 3-year minimum term Leases: 45,000 Saving: £8 437 500 Cost: £4,837,000 Total saving: £3,600,000 |
Taking commercial short leases only Commercial leases: 6,500 Saving £1,625, 000 Cost £975,000 Total saving £650,000 |
Conclusion
Extending registration to short leases is expected to save money. It will enable quicker conveyancing and open the way to greater savings in the future. It will also reduce the number of interests that can exist off the register. With the advent of electronic registered conveyancing the advantage of registered land will further increase.
Voluntary registration is unlikely to lead to sufficient growth to deliver a transparent market. Against this the benefits of registration are greater for longer leases. A reasonable balance could be struck by requiring leases over 7 years to be registered. This would exempt the large class of very short residential lease owners whilst catching the majority of the commercial market where property is both valuable and regularly traded. The land registration system will then contribute effectively to the working of the commercial property market.
Registered title is guaranteed by the state. Registration does not however protect a registered owner against adverse possession of the land by a squatter.
There are broadly two main categories of adverse possession cases: 'land theft' and boundary adjustment.
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Scale of the Problem In the 1990s title to millions of pounds worth of property belonging to some local authorities in London was successfully claimed by squatters. Nor is it only houses that are at risk from squatters. A recent case in Berkshire concerned 57 acres of prime development land used for agricultural purposes. The development value was about £57,000,000. Agriculturally the land was worth about £147,500. Figures from the Land Registry indicate that there is a constant stream of applications by squatters for registration. In a recent Registry survey 300 of the 1000 cases surveyed in Lancashire were the result of adverse possession; whilst other district land registries estimated that they handled about 350 adverse possession cases per annum. Cases of this kind frequently involve new housing estates where intended plot boundaries are not always matched by the developers fencing of the plots. Approximately 40-50% of the applications for title by adverse possession are unsuccessful. |
The options are to leave matters as they are or to enhance the consequences of registration. The degree of enhancement could range from absolute protection for the registered owner to arrangements far closer to the present system. Different rules could apply for different categories of adverse possession cases.
Regulation
Under any system the squatter will have to apply to be registered. The mechanisms for proving ownership will be much the same regardless of the underlying basis of the law so long as a concept of title acquisition by adverse possession remains. Change to a new system favouring the registered owner against the squatter should not increase the regulatory burden of proving title.
Benefits
Making the proprietor more secure
New rules on the application of the principles of title by adverse possession of land to registered land will make the law easier to understand and improve the security of title enjoyed by registered owners. 'Land theft' will be commensurately harder. This will be particularly beneficial to large public sector landowners who may legitimately find it difficult to police all the land they own . particularly when held as part of a 'land bank' for, say, future road widening purposes. However, special provision will be needed to preserve the beneficial effect of the operation of adverse possession where relatively small areas of boundary land are involved. Such provision will ensure that the theoretical ownership and the situation on the ground are kept in kilter. This will also ensure that boundary disputes are kept to the minimum practicable. In any case, to specify narrower and clearer tests should reduce the scope for argument and therefore the cost of disputes. It may also deter some disputes.
An indirect benefit of improving the quality of registered title is that voluntary registration will be encouraged. This will contribute to the completion of the register and the spreading of the benefits of registered conveyancing.
No change
The benefit of not changing the present system is that squatter's would be able to continue to secure ownership of property as easily as at present.
Costs
Making the proprietor more secure
The principal cost of making title by adverse possession harder to obtain is the loss to the adverse possessor of ownership as opposed to occupation. However, this is loss of a windfall. Registered owners will still have to contest proceedings but that is a feature of any system in which adverse possession is possible.
No change
The loss of assets without prior right of challenge is the cost of the present system.
Conclusion
The public benefit of making registered title more secure outweighs the private windfall benefit of the squatter under the present law. Save to the extent that would be 'land thieves' may be deterred from starting to possess adversely, which seems unlikely, the change would not affect the incidence of squatting or the removal of squatters from possession. The proposal concerns only the ultimate ownership of land.
Rights over land which bind a registered owner even though they are not themselves mentioned on the register are known as 'overriding interests'. There are a wide variety of rights within this category.
The greater the number of sources that have to be interrogated the more complicated the conveyancing process must be. The ideal solution from the prospective purchaser's point of view would be to ensure that all rights affecting land are registered. This is not practicable: some rights arise by passage of time or are created informally. The realistic alternative to the preservation of the status quo is to increase the range of rights that have to be entered on the register. The suitability of each category of overriding interest for this treatment must be assessed on a case by case basis. The options are therefore to leave matters as they are or to encourage and/or require the registration of a greater or lesser number of the categories of current overriding interests. Obsolete rights can of course be removed from the legislation without consequence.
Benefits
Requiring a greater number of rights to be registered will remove the need for the separate enquiries that would have been necessary to identify those rights. This will save time. It will also make the register a more complete record of property ownership. This will prevent the later discovery of such a right being a problem to the owner of the land.
In most transactions the seller confirms that he or she is not aware of any overriding interests over the property. Investigation in these cases need generally be taken no further. In those cases where such a confirmation is not given or is qualified, considerable further investigation may be required to establish the desired negative or to clarify the position.
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There are 1 million residential sales each year. If even 1% of those sales is affected by an overriding interest that requires one hour of investigation at £75, there is a cost of £750,000 per annum. If the information had been apparent on the register, the cost would be reduced by a factor of thirty or even more. |
Costs
Bringing overriding interests onto the register will require those who own the interests to make an application. The Land Registry has agreed to waive its fee in cases where registration is required but the applicant will still have to prepare an application and be prepared to defend it. It is possible that bringing overriding interests onto the register will prompt a certain number of disputes as otherwise 'sleeping dogs' are awoken (conversely many 'phantom rights' that generate uncertainty and unnecessary caution may well be flushed out simplifying conveyancing for the future).
Even if certain rights do not have to be registered, many could be. Conveyancers could be encouraged or required to notify the Land Registry of overriding interests discovered in the course of a transaction. As this is merely a notification of a discovered fact, the cost in either case seems likely to be minimal.
| Number of residential transactions | 1,000,000 |
| Number of transactions in which a notification must be made say | 10,000 |
| Processing of notification by conveyancer say 5 minutes on average @ £75.00 | £7.50 x 10,000 |
| Cost of notification | £75,000 p.a. |
Conclusion
The present situation promotes uncertainty. A requirement of registration in appropriate cases would bring certainty. The burden of registration can be eased by sensitive transitional provisions.
Electronic conveyancing is the application of information technology to the conveyancing process. This application is already widespread. The National Land Information Service (NLIS) and the Land Registry already offer a range of electronic services. In conveyancing generally, as in other businesses, the use of electronic communications instead of paper is growing. The use of information technology will both complement and drive the changes to the law already discussed.
Nor is electronic conveyancing confined to England and Wales. It is a worldwide phenomenon. The particular approach adopted differs from jurisdiction to jurisdiction but the underlying ambition is the same . to provide a better, more cost-effective service.
The principal limitation on electronic conveyancing is the legal requirement for paper documents. The intention is that this will be removed.
Electronic conveyancing will develop by stages. For the purposes of this assessment we shall consider the effect of the use of electronic conveyancing documents and electronic applications to the Land Registry. Ultimately, the goal is to create a system in which, as far as possible, simultaneous completion and registration is the norm and on-line registers are as nearly as possible the only sources that conveyancers need to inspect for information about that property. We characterise this as a full electronic conveyancing system. Reaching this stage will be the subject of a prior separate consultation and regulatory impact assessment when electronic conveyancing is further developed.
Assuming electronic documents are permitted the options are to:
Regulation
Electronic conveyancing documents will require regulation in just the same manner as paper conveyancing. The Land Registry must receive information in prescribed formats and with proof of authenticity. The requirements applicable to electronic conveyancing documents will be a consequence of the nature of the documents rather than a new regulatory approach. The regulation attached to full electronic conveyancing will be more complex but that is a matter for consideration later.
Benefits
The principal possible benefits of electronic conveyancing documents will be:
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The Land Registry received 2,840,858 cheques in 1999/2000. Despite special terms the processing costs are significant. |
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The role of the chain in the domestic housing market is notorious. An electronic chain management system would facilitate communication between the elements of the chain. Saving time and effort and reducing uncertainty and stress. In a five transaction chain, it could take a minimum of eight telephone calls to get information from the top of the chain to the bottom and back. With an electronic system this information could be available at the click of a mouse. At £75 per hour and say five minutes a telephone call a trip up and down the chain takes about £50 to make. |
If the conveyancing market is competitive then conveyancers will pass on any savings to buyers and sellers. A faster process with reduced delay will make land and buildings more liquid and flexible assets therefore generating additional economic output. The increased transparency of transactions and the ability to monitor them may produce further savings. On a purely clerical level we estimate that the savings of using electronic rather than paper documents in a transaction will be:
| Saving on clerical labour (1 hour) | £15.00 |
| Saving on preparation and copying of paper contracts/ transfers | £3.00 |
| Saving on postage | £1.75 |
| Saving on storage of papers | £1.25 |
| Total saving per transaction | £21.00 |
These are only preliminary figures derived from informal discussions with a small number of practitioners. To these direct savings, may be added the beneficial effect of using electronic communications on the internal document handling processes of a firm. For a firm which has already invested, as the vast majority have, in IT systems the benefit accruing from that investment will be all the greater.
Costs
To participate in electronic conveyancing conveyancers will require access to appropriate hardware and software. Electronic documents that have to be submitted to the Land Registry will have to comply with its requirements. The requirements are likely to relate to the format and 'signature'. The Land Registry will want to be satisfied that the document received is authentic and genuine. However, 94% of conveyancers have already got access to a personal computer.
The estimated cost of e-conveyancing software for electronic conveyancing documents would be in the region of £200 per user. It is not unreasonable to expect such software to have a shelf life of 5 years, and for it to be renewed every five years. Therefore the cost per user of software spread over five years is estimated to be £40 per annum.
The principal additional running costs in relation to the use of electronic conveyancing documents will be the cost of using an electronic signature and the payment of a fee for the use of the system. The market in e-signatures is still fairly immature, so the cost may well be driven down in due course as the market develops. However, we understand that a charge per use is the norm at present.
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Estimated cost of using E-Signature system |
£5.00 per transaction |
Comparing the savings and the costs on a straightforward transaction produces:
| Savings (per transaction) | £21.00 |
| Costs (per transaction) | £ 5.00 |
| Overall saving (per transaction) | £ 16.00 |
Thus, assuming that the effect of the switch from paper to electronic is neutral in its effect on land registration fees, we provisionally estimate that the use of electronic conveyancing documents will result in a significant reduction in the unit cost of each transaction, subject to whatever proportion of the general overhead of providing and running a personal computer should be allocated to each transaction. Clerical savings are however not the only effect. We anticipate that the use of electronic conveyancing documents will also produce savings in time and improvements in customer service.
The following table illustrates how the adoption of electronic conveyancing documents might affect the legal sector as a whole. The figures are approximate.
| Number of solicitors and licensed conveyancers who do conveyancing | 20,000 |
| Total cost of software per year | £800,000 |
| Number of transactions per annum | 3,000,000 |
| Saving per transaction | £16 |
| Saving if 25% of total transactions are done electronically | £12,000,000 |
| Saving if 50% of total transactions are done electronically | £24,000,000 |
| Saving if 100% of total transactions are done electronically | £48,000,000 |
Thus, on the highly unlikely scenario of all conveyancers taking up electronic conveyancing in the first year and all conveyancing documents being produced electronically in that year there would be a cost of some £800,000 to the legal sector. This would however be entirely recouped.
As electronic services are developed incentives will no doubt be offered to encourage take up and therefore give a better return on investment. We consider that any decision on encouragement of this land is better left to a case by case business decision. Such incentives already exist: office copies of the register cost £2.00 on the Internet through LR Direct and £4.00 by post.
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There were nearly 3.5 million applications to HM Land Registry for office copies in 1999-2000. If all those copies had been issued electronically the saving would have been about £7 million. The information would also have been available instantaneously rather than taking three days at least. |
Full electronic conveyancing
Electronic documents are potentially only a beginning. The systems that could be developed might lead to a system in which electronic completion and registration would be simultaneous (perhaps mandatorily so). The principal potential additional benefits of such a system could be:
Such a system could take one of several forms. Development is at an early stage. The requirement is to ensure that the legal framework will allow development to occur flexibly. The only certainty is that whatever system or systems of electronic conveyancing are developed they will have to be capable of being linked to an electronic land register. Whether or not power to vary the register is retained exclusively within the Land Registry or delegated to others will be decided as the details are resolved. The essential objective is that the authority and integrity of the register must not be compromised.
For present purposes all that is required is first a power to make registration the key element in the creation of a right rather than a confirmation or strengthening of a right as at present and, secondly, a regime to regulate access to an electronic register.
There could also be potential to develop an electronic funds transfer or e-settlement service for all the money payments associated with a conveyancing transaction. This would remove the need for much of the multiple handling of the same money between linked transactions.
The improvements won by the application of information technology would support and be supported by other improvements in the property market and the conveyancing process, such as NLIS and seller's packs. The combined effect of these changes may be to transform the way property, especially residential property, is bought and sold. Reducing the present eight week average period from agreeing terms to exchange of contract to five and below.
Conclusion
In the very short term, we consider that full conversion to electronic conveyancing is impracticable. The market is not ready. For the time being both paper and electronic documents must be acceptable.
At this stage of the development of electronic conveyancing we want to provide a flexible framework so that by working in partnership with stakeholders the Government can ensure that the best solution is discovered and adapted. This process may take some time. Consultation with stakeholders will be essential to establish the real costs and benefits of proposals.
Each of the possible reforms discussed could be taken forward in isolation. Alternatively they can be brought forward as a package.
The five key elements are:Each of these elements complements the others. For example, setting out the common law rule on priorities of minor interests in clear terms will, when electronic creation of such interests is the norm, achieve the result that time of registration will govern priority. This will make the register more comprehensive and extend the benefit of registration to actual and potential owners of minor interests. More strikingly, requiring some short leases to be registered spreads the benefits of registration and reduces the number of overriding interests. Electronic conveyancing will make dealing with such leases easier. Thirdly, making registration and creation of a right simultaneous will both prevent a right being an overriding interest and establish its priority.
Taken as a whole these measures will create a system in which:
These advantages will be complemented by the development of IT to improve the conveyancing process. The combined effect of the new Land Registration system; searches on-line through the National Land Information System and the use of electronic conveyancing documents will be to put the conveyancing process at the disposal of its users. Waiting for things to happen elsewhere will be largely removed from the equation, saving time and effort. Technology will also allow transactions to be linked so that the progress of a chain can be effortlessly monitored. This will reduce the stress caused by uncertainty and the time taken to obtain information.
Each of the elements will deliver improvements but taken together a transformation is possible.
The final form of the conveyancing process as a result of these changes cannot yet be predicted. It is likely to take some years, perhaps ten, before a full system is operational. Growth of electronic conveyancing in the meantime will be incremental and pragmatic. This will benefit consumers and business alike.
The Bill will affect small businesses and voluntary organisations that own property. Where property or a right over property is newly registrable, such as a short lease (as many do), the business will have to bear the cost of registration. Registration of a new lease in these cases will make the lease easier to sell and to borrow against. Registration of other rights belonging to the business that do not have to be registered at present will be an additional expense but the same benefits will flow to these businesses as to landowners generally as a result. Bringing more property and information about property onto the register will assist businesses that want to relocate or expand. In some cases the proposed protection against squatters may be critical in preserving an asset to the business or voluntary organisation.
The Bill will also affect small conveyancing businesses. They will have to become familiar with the new law. This will involve training. However, the new law is clearer and there is a great deal of continuity between the new and old systems. The small scale practitioners will benefit from the greater clarity and simplicity of that law when called upon to advise on it. The coming into force of the new system will be preceded by training and publicity. The changes to the law will not weigh disproportionately on them. The requirement of registration of overriding interests will bring some additional work albeit over a ten year period.
The advent of electronic conveyancing will bring new opportunities and challenges but for those small businesses who are prepared to adopt the new technology (which is not expensive) there are opportunities to compete with larger firms in ways that would not be possible under the paper system. Responses to proposals for electronic conveyancing have been supportive in general and enthusiastic in a good proportion. Comments have included 'The sooner, the better' and 'We have no difficulty in accepting an extension of the use of e-communication and the benefits it can bring'. There are issues to address particularly as to security and trust but these are expected to be overcome. One response predicted that 90% of firms would be using the new system within five years.
Development of electronic conveyancing will take some time. Part of that process will be an assessment of the impact of the proposals. This will include litmus test sampling of both small businesses and small conveyancing businesses.
There will no doubt be conveyancing firms who do not wish to develop any IT capability. The future for them is bleak. However, as only 6% of solicitors do not have access to a personal computer at present and internet penetration grows ever more pervasive, we are confident that this will only be a very small minority.
We consider that the proposed reforms will benefit the sector.
Compliance Cost
Compliance costs would arise in relation to:
In relation to overriding interests these costs relate to a single registration. In relation to leases additional costs will be payable on future dealings with the lease as well as on their first registration. In our view, these costs are outweighed by the benefits that flow from registration both in relation to the individual rights and the property market generally.
Electronic conveyancing will at first be voluntary. Any decisions to move in whole or part to a compulsory system will have to be preceded by an assessment of the costs and benefits of the proposed change. Consideration of compliance cost would form an integral part of that analysis. The issue is therefore for consideration in the future. There are no compliance costs within a voluntary electronic conveyancing system.