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Baroness Buscombe: I thank the Minister for her response. I also thank the noble Lord, Lord Goodhart, for his support with regard to our suggestion that under the Bill as drafted a renewal for a year or even less would be registrable and, therefore, the provision creates a trap. I should like to consider the Minister's remarks carefully before deciding whether to return to the matter on Report. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Buscombe moved Amendment No. 3:

The noble Baroness said: This is a brief, perhaps pernickety, point, but we consider that it is a worthwhile amendment. The amendment is simply for verbal clarification. As paragraph (b) of Clause 4(2) stands, and the expression "held for a term" is read as governing the word "land", which as a matter of language is the last antecedent, there is no minimum duration specified for the "leasehold estate", which is made a "qualifying estate" and therefore registrable. The result would be that any sublease would be registrable if it related to land which was subject to a registrable lease. If the word "held" is omitted, paragraph (b) refers unambiguously to a "legal estate ... for a term" of the specified length. I beg to move.

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Baroness Scotland of Asthal: I am most grateful to the noble Baroness for proposing the drafting amendment which I am most happy to accept.

On Question, amendment agreed to.

[Amendment No. 4 not moved.]

Lord Goodhart moved Amendment No. 5:

    Page 3, line 24, at end insert--

"( ) Where subsection (1)(c), (d) or (g) applies, the requirement of registration applies both to the qualifying estate and to the estate granted of it or the protected first legal mortgage on it."

The noble Lord said: This amendment arises in circumstances where a registrable interest such as a lease for a term of more than seven years as the Bill now stands, or a protected charge, is granted out of unregistered land. That is covered by subsection (1) of Clause 4 which states:

    "The requirement of registration applies on the occurrence of any of the following events".

Subsection (1)(c) states that,

    "the grant out of a qualifying estate of an estate in land--for a term of years absolute of more than seven years from the date of the grant".

Subsection (2) of Clause 4 states that,

    "a qualifying estate is an unregistered legal estate which is--a freehold estate in land, or a leasehold estate in land ... for a term which ... has more than seven years to run".

When I first considered that measure it was unclear to me whether the text of the Bill as it now stands requires the registration of both the existing unregistered interest and the newly-created interest, or only the latter. Paragraph 12.12 of the Law Commission report makes it clear that the requirement applies only to the newly-created interest. Therefore, the unregistered existing interest does not have to be registered at that point. The report also points out in the same paragraph that it is desirable that the newly-created lease should be registered with an absolute title rather than with a good leasehold title, the difference being, of course, that a good leasehold title gives no guarantee of the freeholder's title. Therefore, obviously, an absolute title which does that is much better.

The current practice is, as far as possible, that absolute title should be provided and, therefore, the contracts provide by a special condition which overrides Section 44 of the Law of Property Act 1925 that the grantor of the lease has to prove his or her title. To ensure that, the owner of the freehold will have to deduce his or her own title; that is, produce evidence which is sufficient to establish their own right to registration. It seems clearly desirable that the owner of a freehold should, therefore, be required to register the freehold title on, let us say, the grant of a 99-year lease, just as much as the freehold title would have to be registered in the event of an outright transfer of the freehold.

It certainly seems to me that in line with the spirit of the Law Commission's proposals it is desirable--it would certainly simplify conveyancing--that whenever a registrable lease or a protected charge is granted out of an unregistered estate at the same time

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the unregistered estate should also be required to be registered in exactly the same way as if there were on that occasion a transfer of the freehold title. I beg to move.

3.45 p.m.

Baroness Scotland of Asthal: I should say straight away that we have great sympathy with the attractions of the noble Lord's amendment. But having said that, having gone down that road, we found unfortunately that the measure was not workable. I shall explain why that is in a moment. But before I do that, and before I discuss the substance of the amendment, it may assist the Committee if I touch briefly on the subject of rule-making powers in the Bill as they bear directly on some of the concerns which have been raised.

The Select Committee on Delegated Powers and Regulatory Reform recommended a greater degree of parliamentary scrutiny of land registration rules. Members of the Committee have tabled amendments to that effect. Although I am not sure that the Government can accept those amendments at this point for reasons we shall discuss in due course, I am happy to say that I undertake to bring forward government amendments on Report. I hope that that will assist our discussions.

The amendment of the noble Lord, Lord Goodhart, adds to the requirements for compulsory first registration. It is relevant to three situations listed in Clause 4: when a term of years is granted for seven years or more; when a term of years is granted of any length and takes effect more than three months into the future; and when a protected first legal mortgage is granted of a qualifying estate. The amendment would require not only the estate itself to be the subject of first registration, but also the estate out of which it is granted. As the overall aim of the Bill and, indeed, the Government's general policy, is to widen registration as far and as quickly as possible, I have, of course, listened to the noble Lord's comments with considerable sympathy and very much agree with his overall aim.

It will not surprise the noble Lord, Lord Goodhart, to know that that option was one which the Law Commission considered seriously when considering how to approach the topic. It was discussed in considerable detail with the Land Registry, but after much head scratching it was decided that it could not be made to work. It was therefore not included in the 1998 consultation document. I shall explain why that was the case.

The requirement to register the superior estate when specific leases are carved out of it would catch the superior title to a short lease. In some cases that lease could relate only to a very small area of the total landholding. That would be a disproportionate effect of a deal of that nature and the disproportion could only be increased by the shorter length of leases that give rise to first registration under the Bill. There would also no doubt be processing difficulties for large organisations which have portfolios of short leases that may come up for renewal all at the same time.

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That is the course which the Law Commission and the Land Registry recommend--in relation to a general extension of compulsory registration--despite their considerable enthusiasm for spreading the bounds of registration. I shall not tell tales out of school if I tell the noble Lord that when this matter was revisited the previously mentioned attractions were reconsidered. However, unfortunately, the same conclusion was reached. They discuss the case for introducing wider powers of compulsion to bring more land on to the register. They point to the very considerable advances in the attraction of registration which the Bill will bring. They suggest that compulsion should be avoided unless it is quite clearly required for the common good. They therefore recommend that the need for further action should be considered only five years after the Bill is brought into force. These are clearly attractive arguments which the Government will want to consider, not least in the light of the progress of the Bill. They will make an announcement on this when they issue a formal response to the commission's and registry's report. We shall look at the issue again but we think that the Bill needs to settle for a while.

We have come to the conclusion that to make compulsory now the registration of all land would not be right. First, it would be premature to do so. The Land Registration Act 1997 extended significantly the requirements for first registration and its provisions are broadly reproduced in the Bill. Those changes have started to have effect only recently. The present Bill will offer considerable additional benefits. A significant rise in voluntary first registration is expected as a result. Compulsion should not be employed until it is clear that it is needed.

Secondly, compulsory registration is at present triggered by dispositions of unregistered land. It is not at all easy to devise a system of compulsory registration of title other than one that operates on a disposition of the land in question--unlike the cases dealt with in the amendment. So the mechanism of compulsion in such situations is not self evident. There are dangers that any system could become too heavy handed. We would wish to avoid that. Any system of compulsion would obviously have to comply with the ECHR. The means would therefore have to be proportionate to the desired ends.

Thirdly, the Bill is likely to stretch the resources of both the conveyancing profession and the Land Registry for some years after its implementation. It would not be possible to accommodate a programme for the compulsory registration of all the remaining unregistered land at the same time. I can assure the noble Lord that we believe that the Bill goes some way towards the objective of the amendment. It already has the effect that a legal charge triggers first registration. The estate that has been charged must also be registered. This approach was introduced into the current system of the Land Registration Act 1997. I understand that it is working well at present. The land registration system caters for the situation where the superior title has not been seen by the Land

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Registry and enables the registry to grant good leasehold title until such time as the superior title is produced for registration.

There are incentives in the Bill to encourage voluntary first registration of titles--not least the provisions in relation to adverse possession. There is also a fee reduction to encourage registration. We need to encourage the orderly and gradual registration of these large landholdings at a pace that can be controlled by those organisations and the Land Registry enabling them to cope with those applications smoothly.

For those reasons, I invite the noble Lord to withdraw the amendment.

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