The recently published Housing White Paper "Fixing our broken housing market" outlines the government's proposals to boost housing supply in England. While the focus is, unsurprisingly, on residential land use and many of the proposals relate to the planning system, there are a couple of points of potential significance for the wider property industry.
Making land ownership and interests more transparent
One of the key challenges to increasing housing supply is identifying land that is suitable for development. As part of the strategy for tackling this, the paper makes a number of proposals for increasing the availability of data relating to land and property including:
- Aiming to achieve comprehensive land registration by 2030
At present roughly 83 per cent of the land mass in England and Wales is registered. While this is a significant figure, it does mean that there remain pockets of land which are unregistered and for which there will be little, if any, publicly available data. As part of the drive to achieve comprehensive land registration "all publicly held land in the areas of greatest housing need" is to be registered by 2020, with all remaining publicly owned land to follow by 2025. However, not all of the unregistered land in England will be publicly owned, suggesting that other measures (such as automatic compulsory registration1) will be required.
- Consulting on improving the transparency of contractual arrangements used to control land
The aim is to "better reflect wider interests in land with the intention of providing 'a clear line of sight' across a piece of land setting out who owns, controls or has an interest in it". The reference to contractual arrangements, however, is interesting as our current system of land registration is designed primarily to record interests in land and not mere contractual rights (there are some exceptions; for example, the use of restrictions on title to prevent breach of contract, a topic discussed in the Law Commission's recent paper on the Land Registration Act 2002).
- Improving the availability of data about wider interests in land
The paper suggests that this could be achieved by releasing more information for free and also by seeking to implement the Law Commission's proposals for the reform of restrictive covenants and other interests. The latter appears to be a reference to the consultation on easements, covenants and profits à prendre which concluded in 2011. The Law Commission at that time made a number of proposals including some to better enable the benefit and burden of positive covenants to be enforceable against successors in title. A Law of Property Bill to implement these suggestions was announced in last year's Queen's speech, although so far no draft has been issued.
One proposal the paper does not mention, but which could naturally form part of the strategy of making land ownership more transparent, is the government's suggestion last year that it had plans to introduce a public register of beneficial ownership of overseas companies holding property in the UK. We will have to wait and see whether this will indeed be rolled up with the current proposals. Even if it is not, what is being put forward still has the potential to broaden the application and scope of land registration in England substantially.
Leasehold reform to promote fairness and transparency
The paper acknowledges that "the long-term solution [to the housing crisis] is to build more homes but that will take time to have an impact". Consequently the paper also includes proposals aimed at helping people in the shorter term including acting to "promote fairness and transparency for the growing number of leaseholders".
One particular issue is singled out for consideration – long leases with ground rents subject to short review periods and the potential for them to increase significantly or even exponentially throughout the term of the lease. There has been a growing market for portfolios of ground rents but clearly the government feels that this has not always been for the good of tenants. In fact the paper states "the government is absolutely determined to address this". As such we should expect to see legislative reform of this area with a view to restricting the parameters within which such reviews can operate. The question is how wide that reform will be.
While ground rents are the main issue identified in the paper, the consultation would appear to also be looking more widely at "all unfair and unreasonable abuses of leasehold". There are indications that this could include:
- costs in relation to buying new leaseholds;
- the sale of freeholds and ground rents of leasehold houses which can leave leaseholders "in the dark" as to the identity of their landlord;
- improving consumer choice and fairness in this area; and
- reviving and re-invigorating commonhold.
Given the appetite for mixed-use development, any changes in this area, even if limited to housing, could be of wider interest particularly when structuring transactions.
These proposals ought, however, to be seen against the wider backdrop. The Law Commission invited stakeholders last year to submit suggestions for leasehold reform. A number of proposals were made including:
- revamping the Landlord and Tenant (Covenants) Act 1995 particularly in light of EMI Group Limited v. O&H Q1 Ltd  EWHC 529 (Ch) which held that an assignment from a tenant to its guarantor was rendered void by virtue of s.25 of that Act;
- considering whether there is a modern requirement for security of tenure under the Landlord and Tenant Act 1954 or alternatively reviewing the procedure for contracting out; and
- overhauling the Landlord and Tenant Act 1987, particularly in relation to tenants' rights of first refusal which are, at best, considered tricky and at worst, bewildering.
Overall, this suggests there could be significant changes ahead. Given that leases are one of the key methods for realising property value and the cornerstone of occupational arrangements, these proposals should be of wide interest.
While it would be tempting to pigeon-hole the Housing White Paper as of relevance only to stakeholders in the residential market, that would be a mistake. The paper contains a number of proposals of wider significance, including those highlighted above, which could have a far wider impact on property and property law in England.
1. At present, there has to be a trigger (such as a sale) before unregistered land becomes subject to compulsory registration.
Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.