Transparency in the real estate sector: registering contractual controls

The new regime seeks to capture information about option agreements, conditional contracts, pre-emption rights or promotion agreements that are held for the purposes of an undertaking, eg a business, charity, or other organisation. The schedule to the draft regulations set out a list of exempt contractual rights, described in the table below:

The person who has the benefit of the contractual control right must provide key information about that right to HM Land Registry within 60 calendar days of grant.  There are two points to note about this duty:

2.1 The duty to provide information also extends to notifying HM Land Registry when an in-scope right is assigned to a third party, varied in writing, expires, is exercised or comes to an end early.

2.2 Although the obligation to provide information rests with the grantee, all submissions must be made digitally through a regulated conveyancer.

The information that must be provided to HM Land Registry is as follows:

3.1 the full names of the grantor and grantee;

3.2 where the grantor or grantee is a body corporate, partnership or other legal person, an identifier issued by a UK authority (such as a company number) or, if the grantor is an individual, their date and place of birth;

3.3 the type of the contractual control right granted;

3.4 details of the date, parties, and name of the contract which grants the contractual control right;

3.5 for options, conditional contracts or land promotion agreements, the date from which the contractual control right can be exercised, or details of any conditions precedent;

3.6 how long the period of control lasts, and details of any provisions to extend or terminate it;

3.7 the title number(s) of the estate in land over which the right has been granted, and its address and postcode; and

3.8 details of whether the land subject to the right includes land (including subsoil or airspace) held apart from the surface.

Note that if a contract contains more than one sort of contractual control right, then a separate submission must be made in respect of each such right.

The information will be processed and retained by HM Land Registry in a separate database. It will start publishing some of this information as soon as possible after 6 April 2028 when it will issue monthly updates containing the core data such as the location and extent of land affected, the identity of the grantee, the type and duration of the control right, and the date when the right was granted or exercised. Personal data, such as the date and place of birth of individual grantors, will be kept private.

Rights granted between the date on which the Regulations are made and the commencement date of 6th April 2027 must be notified to HM Land Registry by 6 October 2027.

For rights granted after 6 April 2027, information must be submitted within 60 days of a trigger event, including:

• the grant of a new right; and/or
• in relation to rights where contractual control information has already been provided to the registrar, a written variation of an existing right; an assignment of the right; or the expiry, exercise, or determination of the right.
  
  

The implementation timeline

There will be two aspects to enforcement:

6.1 HM Land Registry may refuse to register a notice or restriction linked to an unregistered right, although they have yet to publish their technical guidance which will explain exactly how this will work; and

6.2 Failing to comply with these Regulations, or knowingly or recklessly providing false or misleading information in response to those requirements, constitutes an offence under section 225 of the Levelling-up and Regeneration Act (“LURA”) 2023.  Such offences can be committed by individuals, partnerships or corporate entities, and by officers or employees acting on their behalf.

The draft Regulations take the real estate sector a step closer to understanding how the new register will work. There are still some process-related questions outstanding, such as how the new register will interact with the register of title for the affected land and how the data on the new register will be verified – these will hopefully be answered when HM Land Registry issues its technical guidance.

There are also doubts about how practical it is to require grantees to notify HM Land Registry of the expiry or termination of contractual control rights via a conveyancer, as there is usually no transactional reason to instruct a lawyer at this stage.

There are wider questions about what (if any) benefits the new register will bring in practice, and whether the existence of the register will either deter landowners from entering into contractual control agreements, for fear of local animosity, or incentivise developers to find other ways to secure land opportunities.

In the meantime, developers should start reviewing proposed contractual control arrangements to prepare for compliance.