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Baroness Scotland of Asthal: Perhaps I may begin by saying that we very much share the noble Baroness's concern in relation to the need to avoid unnecessary bureaucracy and burdens on business. That, of course, is the thrust of much of what the noble Baroness said. However, although we share those aims, we agree that more leases should be registrable and share the benefits of registration. I note what the noble Baroness said in relation to the incremental change. However, during consultation not one voice was heard as to where the dividing line should be taken. We have given the matter a great deal of thought. It is clear from the Land Registry and other organisations that the period of 14 years is one which both the industry and the registry could manage. Therefore, we differ on the speed with which the benefits should be brought into force.
We have considered the matter. We believe that the Bill is more likely to achieve the intended aim without the amendment. Increasing the length of leases that will be subject to compulsory registration would, we think, limit the improvements in the market that the Bill will bring and impede progress towards the realisation of the Bill's overall objectives.
Using the registered system saves money for both domestic and commercial lease transactions. As was helpfully mentioned on Second Reading by the noble Earl, Lord Caithness, who I see is now in his place, agricultural leases will also benefit. As many have pointed out, there is, indeed, a cost to registration. People taking out a new lease would be put to the additional expense of preparing and making an application to the Land Registry. Those costs are not insignificant. We estimate that they may amount to a little over £100 an average transaction.
However, unregistered conveyancing transactions are significantly more complicated than those drawn up under the simpler, more certain law applying to registered transactions. The name and title of any existing or intermediate leaseholders, and the quality of their title, is easier to establish, as is the identity and quality of title of the freeholder. Even if the
I could say more on the subject. I have listened to the Minister's response. I am sorry that she is not prepared to move on the amendment. I shall consider the matter further; however, I suspect that we shall bring it back on Report. On that basis, I beg leave to withdraw the amendment.
These amendments are designed to remove the need to register a lease which takes effect in possession more than three months after it is granted, if it is not otherwise required to be registered, in a situation in which it is a renewal of an existing lease to a tenant already in possession.
The reason for making such a reversionary lease registrable--set out in paragraph 3.32 of the consultative document Land Registration for the Twenty-First Century--is that, if it is not registered, a buyer of the landlord's interest may not be able to find out about it before the term actually begins because the tenant is not yet in possession. But that objection does not apply where the reversionary lease is a renewal to an existing tenant. In that situation, we suggest, there is no practical need for such a lease to be registered merely because it does not take effect immediately.
Lord Goodhart: I believe that there is some force in the amendment. I can see that the provision is a potential trap in the circumstances proposed. It does not seem necessary in order to serve the perfectly legitimate purpose that is served by requiring registration of leases to persons who are not currently in occupation under an existing lease.
Baroness Scotland of Asthal: The common theme of these three amendments is to seek to exclude reversionary leases from compulsory first registration (where the landlord's title is unregistered), or from registration as a registrable disposition (if the landlord title is registered). Those reversionary leases would otherwise be subject to the requirements for compulsory registration in Clause 4 or Clause 27, where that lease is a renewal and the tenant under the lease is also a tenant under an existing lease of the type set out in the amendment. The third amendment seeks to provide that such leases should be capable of being protected by actual occupation and so override registered dispositions.
The difficulty with the amendments is that they would place an unreasonable burden on an intending buyer. He or she would have no way of knowing from the register that the reversionary lease existed and would have to inquire of an existing tenant in circumstances where he or she may not expect to do so--for example, where he or she has had produced to him or her by the seller the tenant's existing lease which makes no mention of, say, an option for a further grant. If the intending buyer is purchasing a portfolio of properties the problem could be magnified.
With the advent of e-conveyancing the number of inquiries should be kept to a minimum so that a buyer can rely as much as possible on the entries in the register. So if such a reversionary lease is not on the register, then an intending buyer of, say, the freehold reversion will not know from the register of the existence of the lease. Furthermore, the fact that a new lease taking effect more than three months in the future has to be registered, enables a buyer to protect his position by registering an estate contract or by making a priority search under Clause 72.
The Bill seeks, so far as is practicable, to make the register as comprehensive as possible, particularly with the advent of electronic conveyancing. The proposed amendments would hinder this objective. It would also make the law more complicated by excluding from the category of reversionary leases in Clause 4(1)(d) or Clause 27(2)(b)(ii) certain leases by reference to the status of the tenant under that lease.
There is another, less serious, problem with Amendment No. 2. There is a possibility that the first lease dealt with under the subsection could in theory be also a reversionary lease of some sort. Where this was the case, the tenant would not be in occupation under either lease. This would only multiply the problems that a prospective buyer would face.
In the light of that explanation, I invite the noble Baroness to withdraw her amendments. We have considered this difficulty and we understand why the amendments were put forward. However, looking at the matter in the round, greater transparency will be possible if a lease is registered as we propose.
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