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When buying or selling property, how the title to the property is evidenced will be slightly different depending upon whether it is registered or unregistered.
Currently around 85% of land in England and Wales is registered, but what does this actually mean and how does it affect you?
What is registered property?
It might sound complicated, but registered property literally does what it says on the tin. In short, registering property officially records its ownership with HM Land Registry. The electronic register in other words provides details, at that point in time, of the ownership of the property. The Register will also show any interests that benefit or burden the property in question, for example details of any registered mortgages.
What is an unregistered property?
Unregistered property is quite simply property that has not been registered with the Land Registry yet. Proof of ownership will be evidenced by a bundle of title documents or deeds.
Historically such deeds would have been required to be produced whenever there was a “dealing” with the property, for example, a change of ownership.
The seller (via their conveyancer) of unregistered property must provide evidence of title to the buyer by showing physical, documentary evidence of ownership from a point in time 15 years beforehand, right up to the present day. In conveyancing terms, this is also known as “deducing title”. The logic behind this is that, if at least 15 years of ownership can be established, then it is safe to assume the seller has sufficient title to the property. Thus, the risk of a third party having a claim to the land is reduced.
What is the purpose behind registered property?
The registration of land is essentially the modernisation of the traditional system. Once registered, there is no longer a need to physically produce any original title deeds (albeit there may be some exceptions) to a property. The seller will (via their conveyancer) simply download a copy of the Register to prove evidence of title to the property to the buyer.
The Register can be accessed by, not only a conveyancer, but also members of the public alike. This brings with it its own issues for example the potential for a fraudulent transfer or quite simply whether or not you have a mortgage and how much you paid for the property being in the public domain.
That said, having a bundle of deeds as proof of ownership can of course be problematic. They may be lost or accidentally destroyed making proving title to the land difficult.
It may be just some of the title deeds are missing which can cause issues with identifying the appropriate rights or even the extent of land, leading to an investigation as to where these may be. They should of course be with the current owner but potentially could still be held by the previous one, or a multitude of local authorities who, at some point, have had interest in that parcel of land. There’s no telling either how far back any records might go. Henceforth, you could suddenly find yourself attempting to track down a church legacy charge from the 16th century (yes, this has really happened to someone!).
Furthermore, if you’ve been paying attention to the news at all over the last decade, it’s likely that you’ve heard of a little something called the Housing Crisis. The UK government currently faces one of its biggest housing shortfalls on record, with a large backlog. According to experts, to meet this demand, authorities must build around 340,000 homes a year until 2031. Knowing how much land there is available to build upon will, of course, make things much easier. The Land Registry essentially acts as a giant database of land/property ownership, making the process of looking up who owns what much more streamlined for conveyancers, building authorities, and members of the public alike. It’s little wonder, then, that the government are aiming for 100% comprehensive registration in England and Wales by 2030.
Until such point as all land is registered the two systems of conveyancing will continue to run alongside each other.
Is registration compulsory?
The answer to this is, unhelpfully, yes and no. Several pieces of legislation have been passed in this respect, the most important of which is the Land Registration Act of 2002. This made registration compulsory in the following circumstances:
- When ownership of a property changes hands – such as through buying, selling, inheritance, or gifting etc;
- When a property is leased to a tenant for more than seven years;
- When a property is mortgaged.
These events will “trigger” first registration of the property. Interestingly property does not have to be registered in order for it to be sold. However the original title deeds and documents will need to be available.
How does this affect you?
If you are considering selling property in the near future and it is currently unregistered it would be sensible to consider instructing your conveyancer early on to ensure everything is in order. You may wish to register the property voluntarily to iron out any difficulties before a sale is agreed, although this is not essential and you should consider how long the process will take if time is of the essence.
As the Register is public, as previously stated, this can increase the risk of a fraudulent attempt to transfer ownership. That said registration can provide protection from such fraudulent activity. You can sign up for “property alerts” whereby you will be alerted by the Land Registry if anyone attempts to make changes to the Register and certain restrictions may be added to prevent dispositions. This is of particular importance if you are not living at the property.
You can read more about registration of land here