Land Registration Bill [Lords]

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Mr. William Cash (Stone): I, too, thank those who put together the Bill, which is monumental in its complexity and technicalities.

I declare an interest as a solicitor and a landowner. I also declare the fact that I always found conveyancing to be an immensely complicated subject.

Given that the Minister's explanation was more than adequate, and that the Bill has been through the processes of the Law Commission and the Land Registry— not to mention the House of Lords, where it was extremely carefully examined—it is unnecessary for me to make a prolonged speech that replicates what has already been said, and I shall not detain the Committee for long.

Several matters remain undetermined, and I shall turn to those in a moment. First, I want to place on the record a tribute to the extremely hard work that has been put in by the lawyers who have assisted not only Ministers, but the Opposition, in the House of Lords. In dealing with the complexities of this kind of law, it is essential to have access to proper explanations from people who are sufficiently expert. It helps enormously to have a proper dialogue, even if it is to a certain extent vicarious.

We broadly welcome the Bill, and believe that it will lay the foundations for a system of electronic conveyancing that will be extremely helpful and bring the whole business up to date. It will provide a faster and more open mechanism for the buying and selling of homes and will have real benefits for consumers. As the Minister said, it will affect millions of people.

By common consent, the Land Registration Act 1925 had to be pulled through a hedge backwards. The repeals schedule shows that this is a radical Bill in the sense that it gets to the roots of what has happened in the past and how to bring ourselves into the 21st century. As someone who had to go through the rigours of conveyancing examinations, it is quite something to see such great trees being felled in one simple repeals schedule. I remember sweating over those provisions, and would have wanted them to be repealed a great deal earlier.

The Government are engaging in a sensible pace of reform. Initially, the system will apply only to certain simple registered transactions, and other transactions will become subject to it as time progresses. Ultimately, the system will have to be compulsory if the full benefits are to be realised, but paragraph 5 of the explanatory notes makes it clear that that will be feasible only when electronic conveyancing has become the most effective way of dealing with transactions.

Clause 5 gives the Lord Chancellor the power to make electronic conveyancing compulsory by order at a later date. We are glad to note that that will be achieved by way of consultation. All sorts of problems can crop up, and there are many expert solicitors, licensed conveyancers and others who deal with such matters on a day-to-day basis. All those who have advised on the process, including those in the Land Registry, will acknowledge that any practical, day-to-day problems that come to light as a result of advice tendered by the Law Society and the Bar will be best resolved through sensible co-operation between Opposition Members and the Government.

The consultation process is essential. The Bill is just sheets of paper at the moment, but when it is translated into the realities of daily life it will have a huge impact on millions of people throughout the land. We must therefore exert ourselves to the maximum to ensure that it is not only theoretically and intellectually coherent, but practical. I hope that the Minister will be happy to respond to any practical points that are raised by the practising professions.

Several matters of concern remain, some of which were traversed in the House of Lords but were not satisfactorily resolved. The practising professions are worried that the manner by which documents are executed involves the potential for fraud. Clause 91 provides that electronic documents will be authenticated by electronic signatures. As it stands, the electronic signing agent must give an absolute warranty of authority even if he has been, without carelessness, the victim of an impostor client. Professionals are unlikely to be prepared to use an electronic system that imposes such a risk upon them. If an agent affixes an electronic signature on behalf of someone who turns out to be an impostor, it should have no more validity than an impostor's written signature would have on a paper document. I hope that the Minister and his advisers will consider that.

On the method of certification, the explanatory notes state:

    ``Certification is the mechanism by which an electronic signature is authenticated.''

However, the Bill itself does not specify a particular method by which certification will be achieved. The Government justify that lack of prescription by stating in the explanatory notes:

    ``There are already several ways in which authentication could be achieved, but they are likely to change and develop with general electronic business and commerce.''

We understand that and accept that it is a fair point. The Government are bound to find it difficult to legislate for the future in relation to unforeseen developments. However, the system will depend very much on the professionalism and integrity of conveyancers. Before any detailed rule setting out the requirements for electronic signatures, certification and authentication can be established, there must be a clear commitment to extensive and detailed consultation.

This is a modern—dare I say, new Labour—technique to make rule-making powers and regulations the buttress of a Bill. That has implications for our legislative methods, especially with regard to subordinate legislation. I was glad that an amendment was made to one of the most important provisions in the Bill to ensure a more effective way of examining statutory instruments in relation to any annulment procedure. The Bill contains a huge number of rule-making powers, although I hastily add that some 300 rules already exist in relation to the land registration system. I will not harp on about that negatively because I understand that it is essential for the Lord Chancellor, and those who advise him, to be able to make changes in an appropriate fashion on such a complex matter.

The Bill has complexities in its references to profits, grand or gross—I have forgotten the exact expression. Those complexities must be dealt with through consultation, but are best dealt with by the rule-making procedure, which would also require much consultation as rules emerge. I am sure that the Minister will be happy to confirm that.

Advisers to the Minister are no doubt expecting me to move on to the length of registrable leases. It is one of the hottest issues in the Bill. Within the profession, it is generally thought that compulsory registration of leases in excess of seven years is not necessary or desirable at this stage. The Law Society and other bodies have made it clear that they would prefer a system of compulsory registration of leases with terms of 14 years or more. In the event that that were successful, the term of registrable leases could be reduced and the Bill contains the power to do that.

There is concern over the ability of the Land Registry to deal with the vast increase in applications for registration, in addition to concerns over the adverse impact on the cost-sensitive, small-value commercial market, which is faced with the additional cost of registering leases of under 21 years. That has already been examined in the House of Lords, but it is a practical question. It was raised by the my noble Friend Baroness Buscombe when she moved amendments that would have reduced the length of leases that must be registered from 21 to 14 years, instead of to seven years. I will not explain the arguments because they are in Hansard, but I will quote from a briefing given to her by the Country Landowners Association—I expect that it will be communicating with me soon. Practical questions were raised and I will quote from the briefing to set the scene for future interesting debate in Committee. It states:

    ``By making such leases compulsorily registrable landlords and tenants will be put to greater expense.''

Bear in mind the Minister's comments about making the system cheaper. Whenever one puts people—whether they be landlords or tenants—to greater expense, it has an inflationary effect. The mechanics of the system may be designed to make things cheaper, but if, in practice, they become more expensive for the consumer, it might be regarded as counterproductive. The argument continues:

    ``The current consultation paper on business tenancies, rightly, seeks to remove some of the more cumbersome procedures regarding obtaining exclusions from the security of tenure provisions of the Landlord and Tenant Act 1954 Part II. Yet by reducing the qualifying term to 7 years, in the CLA's opinion, an unnecessarily bureaucratic burden is going to be placed on both landlords and tenants and their advisors.

    The introduction of such leases into the realms of compulsory registration would also impact upon many farm business tenancies which at present do not need to be concerned with registration since their term is rarely more than 21 years.''

That has been borne out in my experience as a Member of Parliament for a rural constituency. Finally, it states:

    ``Many of the CLA's members are parties to such tenancies''—

I am sure that the NFU will have something to say on the matter—

    ``and consequently, given the current state of the rural economy should not be subjected to any increase in the bureaucratic burden that will be brought to bear by this enactment.''

I ask the Minister to bear those points in mind because they will be returned to in Committee. They are practical questions that deal with the need to contain expense, reduce bureaucracy and make legislation clearer—points that he has raised.

Client confidentiality is another important question. All professional lawyers are concerned that the overriding principle of client confidentiality is maintained under whatever system is ultimately introduced for the provision of electronic conveyancing. The Law Society made it clear that it does not believe, on the grounds of client confidentiality, that copies of leases and mortgages should be available to anyone who asks for them.

I have acknowledged the excellent work done on the Bill in the House of Lords and, as we proceed to Committee, I look forward to a constructive and sometimes technical debate with the Minister.

10.10 am

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Prepared 29 November 2001