Why privatising land registration is wrong
The granting of title and guaranteeing of legal interests must be conducted impartially and free from any conflicts of interest, argues John Manthorpe
Two years ago, the government consulted on proposals to transfer the operations of the Land Registry into a 'service delivery company'.
As the government's report on the consultation made clear, '91 per cent of respondents did not agree that creating a more delivery-focused organisation at arm's length from government would enable the Land Registry to carry out its operations more efficiently and effectively' and
'89 per cent would not be comfortable with non-civil servants processing land registration information'.
Despite this informed response, the government has launched a new consultation - seemingly disregarding the views of those who use and depend on the Land Registry's services. It proposes that the operations of the Land Registry should be moved to a private company (NewCo).
The government is clear about the reason - to raise quick money in 2017 to help reduce the deficit.
In considering the proposals, it is timely to reflect that land registries around the world make possible the vital security of tenure on which social and economic success depends. What may seem an orderly, well-established operation is central to the dynamic on which society and businesses, and even governments, function. Maintaining that instant but ever-changing record of land rights in a complex, competitive, and sometimes contentious world of property is the foundation of an ordered and stable society.
At the heart of the government's proposal is that while it would retain 'ownership' of the land register, NewCo would take over the operations of the Land Registry. This private company would grant title and make changes to the legal entries on the register as transactions and other property-related activities occurred. Such 'ownership' is meaningless while millions of changes are progressively made to the land register by the private company.
It makes no sense that one private company would be adjudicating, and granting title, on the land rights of other private companies as transactions occurred. It makes no sense that a private company would have the power to adjudicate on the property rights of citizens, lenders, institutions, local and central government, and even the Crown.
There is a real risk that a private operator would modify practice in order to maximise profits, so reducing standards. This would lead to delays on transactions as issues and disputes arose over incorrect or missing entries relating to ownership, easements, restrictions, covenants, and third-party rights.Accuracy and trust in the integrity of the register of title is paramount. A loss of confidence in the register would have a significant effect on the property and mortgage markets and, as a consequence, the wider economy.
There must also be the expectation that fees would rise as a private company, operating a compulsory and monopoly business, sought to maximise its profits and to recoup its substantial investment. A speculative sale price of £1.2bn has been mooted in the press. Whatever sum the government secures from a sale will ultimately be paid for by those who depend on the Registry's services.
The authors of the consultation document have not understood the adjudicatory nature of the Registry's statutory functions in registering title and guaranteeing land rights - guaranteeing, too, the millions of pre-contract and pre-completion enquiry and search results on which the property market depends.
In 2001 the Land Registry was examined as part of central government's programme of five-yearly reviews. This, the Quinquennial Review, was the most comprehensive study of the Registry's role, financing, and organisation. The review made clear that the Registry should remain as a government department. It recognised, as others had before, that the granting of title and guaranteeing of legal interests must be, and be seen to be, conducted impartially and free from any conflicts of interest. This was essential to the trust placed in its crucial decisions on land ownership and rights. Tellingly, it stated that 'privatisation should be firmly rejected' and would 'be an act of very considerable folly'.
Our system of land registration has served the country well, providing the essential statutory infrastructure for a property-owning democracy which recognises private land rights. The Registry has progressively developed its practice and procedures to respond to the demands made upon it. It has embraced the opportunities offered by emerging technologies. It operates at no cost to the Exchequer. Its status and role has been examined and endorsed by a succession of external studies.
Confidence in land and property as the ultimate source of wealth and welfare in society depends on a land registration system administered with integrity and commercial neutrality. This is not an activity that can be undertaken by a private company.
I hope that the government, on mature reflection of the facts, will recognise, as others have before, that England and Wales must be served by retaining Her Majesty's Land Registry as a cohesive entity and as a public department of government - as it has been for over 150 years. SJ
John Manthorpe CB HonRICS CCMI is the former chief land registrar