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Contractual control agreements over land: Open consultation

The Topline

“With the stated aim of achieving transparency over the control, as opposed to the ownership, of land in England and Wales, the Department for Levelling Up, Housing & Communities, is consulting on the establishment of a register of contractual control agreements over land.”

Steve Nixon, Partner, Real Estate

Steve-Nixon

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Contractual control agreements: What developers need to know

The government is consulting on plans to create a register of contractual control agreements over land.

The idea is to collect information on who controls, albeit doesn’t own, registered land in England and Wales.

The key proposals are:

  • The register would capture data from agreements such as options, pre-emptions, conditional sale contracts and promotion agreements.
    1. The register would operate retrospectively, so parties would have to provide information on agreements dating back to 6 April 2021.
      1. Certain other arrangements, including overage/clawback arrangements, restrictive covenants, financing agreements and agreements for less than 12 months (with no right to extend) would be exempted.
        1. There would be a 60 day time limit for the provision of required data following the completion, assignment, variation or termination/expiry of any in-scope contractual control agreement [1].
          1. Registrable data would include the type of agreement, parties, completion date, start and end date of agreement (including whether it can be extended), land affected, title number(s) and the registering conveyancer’s SRA number. The financial terms of any agreements would not be registrable.
            1. The beneficiary of the contractual control agreement would be required to use a conveyancer to digitally submit the application to HM Land Registry digitally.
              1. Failure to register, or knowingly or recklessly providing false or misleading data, could result in HM Land Registry not registering any notice or restriction applied for to protect a contractual control agreement and potential criminal sanctions.

              Contractual control agreements consultation: our comment

              The rationale behind the proposals is transparency.

              The consultation introduction states: “These arrangements are extensively used by the major developers, sometimes acting as a blocker to communities and SMEs from securing land for development. Currently there is no legal requirement to provide information on these agreements, meaning it is impossible to gain a complete picture of matters affecting land which can act as a drag on development. We are now seeking to address this.

              However, as it is common practice for developers to ‘protect’ their land agreements by the entry of restrictions and unilateral notices on registered titles, the existence of these land agreements and some (but not all) of the data targeted by the proposed new register is already publicly available for the small fee of obtaining the registered title.

              There’s also a risk that the inherent additional administrative burden and conveyancing fees incurred in entering details on the new register will disproportionately affect SMEs and community interest entities, as opposed to better-resourced major developers.

              This is the government’s second consideration of a register of contractual control over land in recent years. Its 2020 call for evidence on the same subject ultimately did no more than inform the current consultation.

              It might be that, again, there is little appetite within the industry or public interest to justify the costs and administration involved in both the upfront establishment of the register, and ongoing compliance.

              Anyone wishing to respond to the consultation via the online survey will be required to provide identifying information and data.

              Alternatively, it’s possible to write to: Consultation on contractual controls, Department for Levelling Up, Housing and Communities, Housing Markets and Strategy Directorate, 3rd Floor, Fry Building, 2 Marsham Street, London, SW1P 4DF.

              The consultation ends on 20 March 2024.

              Contractual control agreements: How we can support you

              As well as helping with the preparation of any consultation response, Walker Morris’ development and housebuilder experts can advise clients on which of their land contracts or provisions could be caught by the proposed register, how the process would apply and on possible sanctions.

              Please contact Steve or David for further advice or assistance.

               

              [1] except in the case of agreements entered into between 6 April 2021 and the in-force date, in respect of which transitional arrangements will allow a 1-year registration period

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