Controlling the land agenda: Government consultation on contractual controls on land

The Levelling-up and Regeneration Act 2023 (LURA) has received much publicity for its promise of wide ranging reforms of the planning system. One of the lesser publicised areas that it also covers extends the trend in recent years for transparency in land ownership, by setting out a framework requiring transaction information to be disclosed to the Land Registry on interests and dealings in land.

Background

A move towards increasing transparency in land ownership is not new. In the government’s 2017 housing white paper (Fixing our broken housing market), the government set out proposals for providing clarity on what land is available for new housing through greater transparency over who owns and controls land. That white paper recognised that there are ways of exercising control over land that are wider than ownership, such as through an option to purchase land or as a beneficiary of a restrictive covenant. The government asserted that the lack of transparency could inhibit competition through land-banking and lead to local communities lacking visibility on who stands to benefit from a planning permission.

Part 11 of LURA, which came into effect on 26 October 2023, takes the trend towards transparency further, enabling the collection of information on a range of transaction types and a range of purposes, with the aim of gaining a better understanding of who ultimately owns or controls land in England and Wales. 

Whilst Part 11 sets out the broad framework, the detail will be set out in secondary legislation. The government is moving forward with its first category under Part 11 - ‘contractual controls of land’ in England and Wales – and there is an open government consultation seeking views on its plans to require information to be disclosed on agreements such as option agreements, pre-emption agreements, and conditional contracts, with accompanying draft regulations now published. Developers and landowners should take note.

What information will be caught?

The three “permitted purposes”

Part 11 sets limits on the information that will have to be provided to the Land Registry in connection with interests and dealings with land - specifically, that the information must be within the scope of one of the “permitted purposes”. These are:

1. Beneficial ownership - This catches information that would be useful for identifying the beneficial owners of land in England and Wales or for understanding their relationship with the land that they beneficially own. There is overlap here with existing regimes, such as the Register of Overseas Entities and HMRC’s Trust Registration Service.
2. Contractual control – Information is within the scope of this limb if it appears to the Secretary of State that it would be useful to understand relevant contractual rights and the circumstances in which they were created or acquired. It is this limb that is the subject of the current consultation.
3. National security - This would catch information relating to land where a threat to national security arises either due to the location of the land or anything situated or done on it. The provision of the information must be justified in the interests of national security.

The scope of the ‘contractual control of land’ limb

The draft regulations on contractual controls of land give further detail on what types of agreement will be caught within limb 2 and the information that must be disclosed. The types of agreement caught are:

• Option agreements (agreements giving a party the option to buy land within a specified period).
• Pre-emption agreements, which give a party first refusal to buy land when an owner chooses to sell.
• Conditional purchase contracts, where a buyer must purchase land once certain conditions have been met.
• Promotion agreements, which allow a developer or specialist to promote land owned by others through the planning process and market the property once planning is obtained, subject to a fee.

Restrictive covenants (which restrict the use of land) and overage agreements (which entitle a seller to future payments in certain circumstances) are not caught under the draft regulations.

The information that will need to be disclosed to the Land Registry includes the type of agreement and date of it, the parties’ names, the title numbers, the extent of the land affected, and the term of the agreement (including whether it can be extended and the ultimate end date). This means that the underlying agreements themselves do not need to be disclosed (allowing financial data to remain confidential), but in some cases the mere existence of the agreement may well be commercially sensitive. 

From 6 March 2026 (the proposed date for the regulations to come into operation), parties will have 60 days after the date of an agreement (or any subsequent variation or assignment) to submit the information to the Land Registry. In practice, the trigger for providing the information may well be the associated Land Registry application to protect the interest as the Land Registry will not process applications until the information requirement has been met.

Failure to provide the information will be a criminal offence. 

How can this information be used? 

The Land Registry intends to keep a database of the information, which will be available for bulk download. The format of this data likely means that it will of use primarily to proptech companies. In the future, the government has said that it may develop options to interrogate or access the data, such as by searching against individual titles. Whilst the government suggests that the data is to be made public and freely available, it’s unclear how user-friendly it will be unless accessed via proptech tools, which will likely come with their own costs. 

Retrospective effect

Under the current proposals, once the regulations are in force, information will need to be disclosed on all existing agreements entered into since 6 April 2021. There will be a transition period of 12 months to give beneficiaries time to collate and register information on existing agreements. This retrospective effect could result in a significant administrative burden; certainly, it would be worth developers starting to collate and store data on transactions now, using the categories proposed in the draft regulations, to ease the burden in 2026. Agreements with less than 12 months to run (absent of a right to extend) will be exempt.

The consultation closes on 20 March 2024 and can be accessed here.