Contractual controls on land – consultation

On 24 January 2024 the government published a consultation seeking views on its plans to publish a 'large' dataset which would contain information about certain 'contractual control' agreements in relation to land in England and Wales.

The government notes that when it is referring to 'contractual controls' it is referring to 'agreements, such as option agreements, that are used to control land short of outright ownership' and that it is seeking to create a public, freely available dataset comprising the ''what', 'where', 'who' and 'when' of contractual control agreements'. However, the consultation states that the government does not propose collecting or publishing the actual contract.

By creating and publishing a 'trusted' dataset the government sees it will allow technology companies to create 'user-friendly tools and applications that may reduce the time and cost of site identification and assessment by Local Planning Authorities (LPAs) and developers, and help communities and local authorities understand the likely path of development in their area.' Helping to shape and support policy development is also identified as another benefit of collecting and publishing this information.

The consultation runs until 20 March 2024.

What is the background to the consultation?

The government first consulted on these measures in an August 2020 call for evidence. At that point it was noted that the proposals would require both primary and secondary legislation to implement.

Fast forward then to the Levelling-up and Regeneration Act 2023 (the Act) which received Royal Assent on 26 October 2023.  The Act contains a framework to allow the government to capture 'Information About Interests And Dealings In Land'. These are wide ranging provisions. In relation to England, the provisions allow for the Chief Land Registrar (or other person exercising a public functions on behalf of the Crown) to require the 'provision of information' where it is within the scope of a permitted purpose.  There are three permitted purposes set out in the Act; the beneficial ownership purpose, the contractual control purpose and the national security purpose. A short draft statutory instrument has also been published alongside the consultation.

What contracts will be in scope and need to be reported?

Option agreements, conditional contracts and pre-emptions agreements are set out as being in scope.  Promotion agreements are also mentioned in the consultation.  Such agreements must be in writing and relate to registered land.  They should be for 12 months or longer from the date the requirement to register arises (or if shorter than 12 months at the date the registration requirement arises there will still be a requirement to register if there is a right to extend the length of the agreement).

The consultation and draft regulations also set out that the agreement must be 'intended to facilitate the future development of an estate in land'.  The consultation states that the government is looking to capture information about agreements which are 'intended to secure land or property for residential, commercial or mixed-use development.'

The land must also be held for the purposes of an 'undertaking'.

Further guidance on the scope of the regime will be essential if the regime is implemented, particularly in light of the consequences for failure to comply which includes criminal liability.  As things stand it is unclear whether a normal agreement for lease with development obligations would be captured.

What's not covered?

There is reference to 'exempt control agreements' which will not be caught by the regime. Proposed 'exempt control agreements' currently include those made for 'the purposes of 'national security' or defence' or 'an agreement made to facilitate finance and loan agreements'.

The consultation also proposes that restrictive covenants and overage and clawback agreements will be out of scope.

What kind of information will be collected and published?

The proposed information to be collected includes the date and type of agreement, the parties names and relevant registration numbers for corporate bodies, the term of the agreement (including details of any right to extend), the property to which it relates (including title number) and the Solicitors Regulation Authority details of the professionals involved.

How will the information be collected?

The consultation proposes that 'conveyancers' will be required to submit the information (so a party will need to instruct lawyers in order to submit this information and comply with the regime).

What are the proposed timings?

The government sets out in the consultation that it expects the measures to come into force in April 2026.

From the date the measures come into force, information will need to be provided by the 'grantee' of a contractual control agreement within 60 days. Triggers will be the grant or assignment of a contractual control agreement or a written variation of an agreement which alters any of the required information.

The expiry or termination of any agreement on the database must also be reported to the Registrar within 60 days.

The draft regulations provide the that database must be published 'as soon as possible after April 2027'.

Will the measures apply retrospectively?

The regime will be retrospective and the proposed measures will catch agreements entered into from 6 April 2021. It appears there will be a twelve month transitional period during which information in relation to these existing contracts can be provided.  In relation to assignments or variations of contractual control agreements it is proposed agreements entered into at any time may be caught where a trigger event occurs.

What if you don't provide the information?

Where information has not been provided, the Land Registrar will refuse to register any notice or restriction in relation to the agreement against the relevant title. However, the consultation states there are no plans to prevent the registration of a transfer of an estate where information has not been provided (as is the case with the Register of Overseas Entities)

Failure to comply may also be a criminal offence.