+44 (0)20 7766 5260

Land Registry - To privatise or not to privatise - that is the question: The potential effect on every hamlet

Land Registry - To privatise or not to privatise - that is the question: The potential effect on every hamlet

Published: 30 September 2016


The Government has for some time been looking at privatisation of the Land Registry. Currently, both the Land Register and the Land Charges Register are Crown property however, a number of private equity firms have expressed interest in purchasing the Land Registry. One reportedly has been planning a £1 billion takeover.

A recent Consultation on privatisation closed on 26 May.

The preferred model so far has involved a contract between the Government and a private operator. The Department for Business, Innovation and Skills currently favours this model, whereby the Register would remain the property of the Crown but its core functions would be transferred to a separate newly formed company. Investors would then later have the opportunity to buy shares in that new company and the Government could retain some level of ownership in the company or perhaps come to some other arrangement.

The Consultation anticipates that the majority, if not all of the economic benefit and risks of ownership associated with privatisation will be transferred to the private sector. The scope and standards of service that the new company would deliver would be governed by the service contract, which would also set out mechanisms for addressing underperformance.

Moreover the contract could perhaps provide greater certainty for investors and stability for customers and, in theory, ensure that the right protections are put in place to address the concerns associated with privatisation. However, apart from naming several existing protections which are to be retained, the Consultation does not discuss this further.

For this model to succeed, the Government would need to retain the ability to manage and actively supervise the contract. However in order to ensure this, there would have to be individuals within the Government who would need to have the appropriate expertise and understanding of land registration and, at the same time, have responsibility for the on-going relationship with the new company taking it over.

The Government apparently does not anticipate this to be too costly but this may depend on the effectiveness of the new company to perform its functions. The suggestion is that this model would be deliverable some time in 2017.

The proposed changes are supposed to improve the efficiency and effectiveness of the Register. Land registration can be subject to long delays and be a source of frustration to conveyancers due to what, can seem to be, excessive bureaucracy.

However in the short-term there are unlikely to be tangible benefits to efficiency as it will inevitably take time to fully implement the proposals and, ultimately, there is no way of knowing now whether privatisation will improve the effectiveness of the Land Registry in the long-term.

At present, the details of how the new company will improve the efficiency of land registration do not appear to have been adequately considered.

It may be the case that by selling the Land Registry for short-term capital gain the Government could potentially exacerbate the Land Registry’s existing problems. Whilst the data would remain the property of the Crown, by outsourcing the functions of the Land Registry to a private company, there is an inherent risk that the independence, impartiality and confidentiality of the Register will be affected.

People need to be aware of the risks of the proposed privatisation, primarily because of the importance of ensuring that these vital functions are not compromised in any way. Privatisation would only be of benefit to conveyancers and land owners if it rectified the Land Registry’s existing problems and generally improved efficiency.

A Government source recently said that at present no decision has been taken on the future of the Land Registry and they are still considering the matter. The Law Society has welcomed this development and said that privatising the Land Registry would involve serious risks. The final decision must be taken after consideration of all implications and it must put the public interest first.

We await the outcome.

Howard Sykes
Property and Private Clients