Who’s in control? Consultation on greater transparency about the terms of land agreements

The government is consulting on proposals to make key information about contracts, options and rights of pre-emption over development land disclosable.

Introduction

The government has set out ambitious changes to the planning system, seeking to make it more democratic, more dynamic and more open. It considers that better data on land ownership and control is an essential prerequisite for the achievement of that vision. The government therefore proposes to increase the transparency of contractual arrangements used to exercise control over the buying or selling of land. It believes that this will improve the ability of local communities to play an informed role in the development of their neighbourhoods and support the government’s efforts to encourage more companies to enter the house building market.

Background

The Land Registry records ownership of land in England and Wales. However, even if land is registered, not all interests relating to it are necessarily clearly recorded on its title. For example, a land owner may have entered into a conditional contract, option or right of pre-emption that gives a developer the right to acquire and develop the land. Although a notice of such an agreement can, and often is, recorded on the land owner’s title to protect it, very little information about the person with the benefit of the agreement or its terms is available. These types of agreement often give the developer control over the current use and future development of the land affected.

The government believes there is a public interest in open access to information on land ownership. However, without better data on contractual controls the public cannot fully understand who exercises control over land, which may be more important than knowing who the legal owner is. The government considers that there is a public interest in the publication of better data on land that is subject to contractual controls, the nature of those controls, and their beneficiaries.

Proposals

The government proposes to collect additional data that will allow the public to easily understand what land is subject to a contractual control, who is the beneficiary of that control and on what terms control is exercised. As the public interest lies mainly in land that could be used for development, it is not proposed to collect data on an individual’s contractual arrangements or rights relating to the purchase or lease of a domestic residence, testamentary options or statutory rights. The proposals will apply only to registered land.

The government wishes to precisely target additional data requirements to avoid placing unnecessary costs on parties to normal residential or commercial transactions and their professional advisers. For contracts for the sale of land, the contract would need to have a completion date that may be more than six months after exchange of contracts and be conditional on the grant of planning permission. However, options and rights of pre-emption would be subject to the new requirements without these limitations. The consultation asks whether there are any other forms of land agreement that should be subject to the new requirements for disclosure.

The proposal could also apply to existing agreements if they are subject to variation, assignment or novation. Many agreements last for a number of years. Therefore, the government would like views on whether the requirement to provide additional data should be extended to existing arrangements in these circumstances.

The information to be provided will include the type of agreement, the land subject to the agreement, how long it lasts, names of the parties and their legal advisors, details of any beneficiaries who control the parties, any deposit, option or pre-emption fees payable, the price and how it is determined. Not all of this information would be shown by the Land Registry – in particular price information would be excluded.

Effect

If the proposals are implemented, developers would need to provide additional information about the terms of the agreement. It will not be possible to protect the agreement at the Land Registry until the information has been provided. To give greater transparency, it would not be possible to note the agreement without providing a copy of it to the Land Registry so that it becomes a publicly disclosable document. The right to remove sensitive information from the document before sending it to the Land Registry would be modified so that the data required under the new regime could not be redacted where that information falls within the information that the Land Registry must disclose.

As protecting an agreement at the Land Registry is optional, the government would like views on options to make notification mandatory in certain cases. Among the measures that the government is considering is a new requirement on beneficiaries of agreements to certify in their annual accounts that all relevant interests are the subject of an agreed notice.

Comment

These proposals represent a radical change that will have a significant impact on developers and the amount of information that they have to disclose about deals that they have entered into with landowners. Developers will be rightly concerned that the government’s plans for greater transparency may require the disclosure of commercially sensitive information about their business proposals and development opportunities that they have identified. It will be important for those affected by these proposals to respond to the consultation and identify the problems that the new disclosure regime may create.

The proposals may also apply more widely than the government intends. For example, a developer may already have outline planning permission for a new retail / commercial park. It enters into agreements with tenants for leases or sales of units that are conditional on the grant of full planning permission. These would potentially be subject to the new disclosure regime as well if the tenants wanted to protect their agreements for lease or sale agreement. More work will be required to ensure that the new provisions are targeted at the developers themselves and not those who enter into agreements with them.

The government is also consulting on whether the proposals should apply to other forms of agreement beyond conditional contracts, options and pre-emptions. Promotion agreements and collaboration agreements are an obvious target that the government may aim to include within the proposals, and may be driven by (for example) the desire of government to demonstrate “deliverability” of schemes to support larger scale residential developments. As well as identifying forms of agreement that should be caught, it may be beneficial to identify agreements that should specifically be excluded from the new proposals.

The consultation paper, “Transparency and control: A call for evidence on data on land control” can be downloaded here. Responses are required by 30 October 2020.