Department of Business, Innovation and Skills Considers Privatisation of Land Registry

The Land Registry is the Government Department responsible for maintaining records relating to land in England and Wales. Founded in 1862, its principle duty is to maintain a register of the ownership of and interests affecting land in England ad Wales. Where land is registered with the Land Registry (and around 80% is) it guarantees title to the land and this state backed guarantee is the cornerstone of the modern property market. It means that buyers can buy land and know it will not be affected by any adverse interests save for any they already know about before their purchase.

The Land Registry is a Trading Fund. This means that unlike other Government departments it generates its own income and does not receive Treasury funding – it is self supporting and actually makes a profit. There is no question that its purpose is essential and as an organisation it is widely trusted and respected. Nonetheless the Government is consulting on plans to part privatise it.

The Government’s Plans

The Government, through the Department of Business, Innovation and Skills, the Ministry responsible for the Land Registry, proposes creating a separate company to carry out the day to day functions of the Land Registry, i.e. dealing with applications for registration, requests for copy documents and the production of data on house prices and other housing market data whilst retaining a separate, much smaller, Office of the Chief Land Registrar (OCLR).

It is proposed that the OCLR will deal with policy issues such as fee setting and changes to the Land Registration Rules, as well as continuing to indemnify against mistakes in the Register and being ultimately responsible for dealing with claims for compensation (albeit a claim will first be heard by the new company). The OCLR, we are assured, will still have overall responsibility for maintaining the integrity of the Register but on a day to day basis it will be maintained by the new company.

It is not yet decided whether the Government will invite the private sector to form its own company or whether it will be formed by Government and run by a private sector firm.

What’s The Rationale Behind Privatisation of the Land Registry?

From what we can see, very little. Of course the DBIS have trotted out the usual lines about improving efficiency and saving the tax payer money but these are difficult to substantiate. Whilst it is true that most Land Registries at the time of writing have a worrying backlog of registration applications, there re obvious excuses for this. After the housing market crash they inevitable found themselves over staffed and so staff numbers were quite drastically reduced by amalgamating several regional offices, Now we have a sudden, unexpected and quite sharp upturn in the property market which means a sharp increase in workload for the Land Registry. It’s difficult to see how introducing a private company, which will be looking to save rather than increase costs, will help the situation.

They say that allowing the Land Registry to operate as a limited company with less statutory constraints will allow it to be more flexible. There is no elaboration on what they mean by this but the inference seems to be that it will be able to make more profit by cutting services or cutting corners.

The Consultation

As it is obliged to do, the DBIS ran an 8 week consultation which ended on 20^th March 2014. The point of these consultations is to seek the views of any “stakeholders”, that is any person or organisation with  vested interest in the particular issue. Theoretically any objections have to be considered and could ultimately lead to changes to the proposal or to it being scrapped altogether. Incredibly, neither the Law Society, the Bar Council nor the Council for Licensed Conveyancers were included in the consultation. These are the three organisations that represent lawyers in England and Wales and bearing in mind that lawyers represent almost the entire customer base of the Land Registry their omission was at best a glaring oversight or at worst a deliberate abuse of the consultation process. Needless to say they have made their voices heard.

The Risks of Privatisation of Land Registry

What is the ultimate goal of a private company? To make as much profit as possible. Simple. As the PR department and they will talk about improving the customer experience and making a positive impact on society, but we all know they only care about these things insofar as they help get more customers and increased profit. That isn’t a criticism of private companies, most of us want to be rich after all, it’s just a fact.

The difficulty is that the Land Registry is currently run in the public interest so whilst it does generate a profit, some profit is sacrificed in order to provide a cheaper, better service. It is difficult to believe that the current service levels will be maintained by a private company for the same price therefore in the initial phase, where the state will continue to control pricing, it must be assumed that cost savings will be made. This is likely to be in the form of reduced staff numbers or experienced, highly skilled staff being gradually replaced by by less experienced, less qualified employees.

Although initially we are assured full privatisation is not part of the plan many commentators believe it will happen eventually (it usually does). Once it has it will be harder for the state to control pricing. One only has to look to the energy companies or more pertinently, the railways for evidence of that. What makes the railways a more pertinent example? Each regional rail company has an effective monopoly and it is an essential service, so there is no competition to regulate pricing and no option but for the customer to pay whatever is demanded. It is difficult to envisage how there could be more than one Land Registry company – there can only be one official register – therefore we are likely to say the same issues – price increases above the level of inflation coupled with deteriorating services – as we see now with the railways.

Petition against Privatisation

so strongly do many in the conveyancing industry feel about privatisation that a petition has been created. We encourage you to sign it. You can do so by clicking this link: http://epetitions.direct.gov.uk/petitions/60616.