Letter to Minister for Business and Enterprise

Appendix to the Local Land Charges Institute’s letter to Michael Fallon MP regarding the proposed Land Registry takeover of the Local Land Charges function

29^th January 2013

 1.       Why does Land Registry want to take over the Local Land Charges service?

1.1  Land Registry’s current proposals date from 2010. Its position, as stated in its FAQs about the proposals[2], is that:

“The Land Registry Advisory Council (LRAC)[3] identified an issue with the lack of standardisation with the current provision system of LLC and CON29 searches. These included variations in speed of service, cost and format between the 350+ Local Authorities.

LRAC asked Land Registry to examine the possibility of providing LLC searches to a standardised speed, cost and format. If this were possible, it would ultimately contribute to the Government’s ‘Digital by Default’ agenda to provide more government services online.”

1.2  Having studied this subject on the above basis for 3½ years, Land Registry has in its consultation document added reference to a World Bank Report on ease of doing business as a justification for its proposals, although Land Registry’s proposals would most likely have a negative rather than positive effect on the ease of doing business. 

1.3  It is clear, however, that additional factors are in play. On 25^th January 2011 the Land Registry’s Commercial and Customer Director, Annette Davies-Govett, wrote to Lord McNally, Minister of State at the Ministry of Justice[4], stating:

“Land Registry has identified a diversification opportunity which it would like to investigate. (Para1)

The Land Registry Board recognises the potential income stream and agree that regardless of the outcome of the Feasibility Study, [this?] is a proposition worthy of further exploration by Land Registry. (Para 4 – emphasis added)

The proposition would help protect Land Registry against the risk of future downturns in the property market, provide the public with a consistent offering, experience and pricing framework, and add value to Land Registry. (Para 17 – emphasis added)

These proposals are driven by the opportunity to deliver an improved public service experience, standardise pricing, leverage Land Registry’s assets, increase the value of Land Registry’s assets and protect the Registry from any future market downturns. (Para28)”

1.4  Thus it would seem that Land Registry places as much emphasis on improving its own financial position as it does on providing a better service, and is willing to ignore the findings of its own research if they do not support its desired outcome.

2.   Is there a problem with the functioning of the current Local Land Charges service?

2.1  Land Registry says it has identified variations in speed of service, cost and format between local authorities in their provision of local authority searches. These do indeed exist, but their significance is overstated.

Speed of Service

2.2  The vast majority of local authorities take less than 10 days to process searches. Many complete them within one or two days of receipt. Land Registry say the LRAC identified the variation in time taken by local authorities to process Local Land Charges searches as causing a problem in the conveyancing market. However, with the average time for a house sale to go through being 8 – 12 weeks and most local authorities completing searches in days rather than weeks it is difficult to agree with this assertion. As Land Registry is proposing only to process searches of the LLC register, and leave CON29 enquiries to local authorities to answer, conveyancers will still be relying on local authorities and their variable response times. Land Registry perceives a problem but its proposed solution does nothing to address it.

Cost

2.3  Local authority search fees do vary, indeed vary considerably, from under £50.00 to over £200.00 for a standard search. Until the late 1980s fees were set nationally but were then deregulated. Authorities are required to set fees on a cost recovery basis. Costs will naturally vary as authorities hold data in different formats (e.g. card index, paper map and electronic databases), and in different departments (e.g. Building Control, Planning, Highways and Health). These require differing staff and other resources to search databases and provide searches. For conveyancers the costs are transparent, they generally only change once a year and can be ascertained by a simple ‘phone call or visit to an authority’s website. 

2.4  Under the current Land Registry proposal CON29 searches will still be carried out by local authorities. CON29 searches tend to be more complex and costly than searches of the Register of Local Land Charges so these costs will still vary between authorities.

2.5  If differing costs really are a problem a simple Statutory Instrument could set a single national price for all searches, as was historically the case.

Format

2.6  As local authority IT systems vary, so do the formats of the documents they produce. All searches, however, provide Certificates of Searches of the Register of Local Land Charges as set out in the Local Land Charges Act 1975 and the accompanying Local Land Charges Rules 1977. The CON29 forms are a standard set of questions (agreed between the Law Society and the Local Government Association) and the answers are given accordingly. Such local variations as currently exist seem not to provide much of an obstacle to the conveyancing profession.

2.7  In abandoning its original proposal to provide the CON29 service itself, Land Registry has recognised the difficulty of standardising all the necessary local authority data in a digital format.

3.   If there are problems with the current Local Land Charges service, would they be resolved by the service being taken over by Land Registry.

3.1  As previously indicated, LLCI does not accept that variations in speed of service between authorities significantly impede the functioning of the conveyancing process and the housing market. More importantly, Land Registry has not demonstrated how it would deliver a speedier overall search service. Nor has it indicated what its fee levels would be or addressed the significant IT hurdles to be overcome in combining information held in multiple databases and formats to provide search results in a standardised form.

3.2  Local authorities provide a good service with high levels of customer satisfaction. If necessary speed, cost and format could all be regulated by simple Statutory Instrument. The Land Registry proposals are akin to taking a sledgehammer to crack a nut, entailing significant upheaval and service disruption and necessitating extensive legislative changes.

4.   Is there a demand from stakeholders for these proposals?

4.1  Land Registry has commissioned two major stakeholder (mainly conveyancer) surveys into its proposals, the first by Synovate in 2011 and the second by Ipsos MORI in 2013.

4.2  The key findings from the 2011 survey[5] were (emphasis added):

• Strong support for LR to provide Local Land Charges and CON29 searches.
• Customers would not accept just the LLC1 service (without CON29). It has to be the full service or nothing.
• The consensus is that the proposition fits in well with other LR services.
• Crucially, customers have confidence in LR’s ability to deliver the proposed services.

 4.3  The key findings from the 2013 survey[6] were (emphasis added):

• Changes in the search process have delivered improvements in the last few years.
• The current search process is relatively simple with few significant frustrations.
• A limited need for the Land Registry proposals has been detected in the marketplace – “the system is working well now”. There is mild support for the proposal but a large minority are sitting on the fence. Satisfaction is high for the current provider so there is no overwhelming desire to change.
• Lenders can see some benefit in promoting clarity and transparency within the process.
• Overall response of solicitors and conveyancers somewhat positive, with certain reservations and questions around implementation.
• There is confidence in Land Registry’s ability to provide the service which is partially driven by positive experience of working with Land Registry.
• There is opportunity to streamline the current searches process and many are open to standardisation. However, there is concern that local expertise will be lost.

4.4  We would highlight the change in emphasis between 2011 and 2013. “Strong support” has become “a limited need”. Despite the finding in 2011 that “customers would not accept just the LLC1 service” that is what Land Registry is proposing. As the later survey reports, the current search process is “relatively simple” and “satisfaction is high with the current provider”. “There is concern that local expertise will be lost”. None of this points to demand for a single, centralised service.

4.5  In September and October 2013 LLCI surveyed over 400 solicitors and conveyancers across England and Wales[7]. The key findings from this survey were:

• 43% of respondents were not aware of Land Registry’s proposals.
• 93% of respondents had not been invited to take part in Land Registry’s customer research.
• 67% of respondents would prefer the local search service to remain with local authorities, with 24% undecided and only 9% in favour of Land Registry taking over the service.
• 84% of respondents were satisfied or very satisfied with the local authority search service, with only 4% dissatisfied and 1% very dissatisfied.

4.6  Typical comments from respondents include:

• “Absolutely must not be done by the Land Registry, the local authority holds the information, why would you ask someone from another agency to obtain the information.”
• “Local Authority has years of information. [To] put in the hands of someone with no experience would be disastrous!”
• “Local authorities have better knowledge of their areas and there is a danger of inaccurate data being interpreted.”
• “I do not see the point in splitting the service - a faster LLC1 result alone would not assist if the CON29R and CON29O were dealt with by the Local Authority. Not convinced about dealing with Land Registry Customer Services in the event of a query. Would rather deal with experienced staff within the Local Authority.”

4.7  If conveyancers want simpler conveyancing channels these already exist. NLIS, the National Land Information Service[8], provides a simple software package for ordering all conveyancing searches in one online submission. NLIS, although backed by a private company, was established in 2001 with considerable investment from government. There seems little to be gained by Land Registry simply creating another NLIS. Indeed, the Land Registry proposals potentially have significant implications for the viability of NLIS and risk depriving customers of real choice. The same considerations might apply to other companies such as TM, ETSOS and the various water companies that also provide simple conveyancing services.

5.   Has Land Registry consulted effectively with the current providers of the service?

5.1  Since 2011 Land Registry has engaged in consultation with Local Land Charges officers. Land Registry has attended meetings of the LLCI and the annual Local Land Charges Training and Development event in Bristol. Land Registry has visited over 200 local authorities and held open days for LLC officers at regional Land Registry offices. At all of these meetings, and on their dedicated page on the LLCI website, Land Registry has outlined its intentions and invited questions about its proposals. What Land Registry has not done, however, is provide substantive answers to detailed questions from the people who know most about the service as to how it would run it. Land Registry has failed to articulate clearly how it intends to deliver the service, and at what cost. Until it is able to do so, the disruption and uncertainty inherent in the Land Registry proposals cannot be justified.

5.2  Despite the apparently comprehensive nature of the consultation, to date Land Registry has been very slow to involve Local Land Charges officers in particular, and local government in general, in detailed discussions. Work on the project started in 2011, but not until January 2013 was a serving Local Land Charges officer invited to join the Prototype Project Board. Land Registry did not meet the Local Government Association to discuss its proposals until the summer of 2013 and only in October 2013 was a Land Registry Local Government Focus Group established. No Local Land Charges officer or other local government representative has ever been invited to a meeting of the Land Registry Advisory Council to discuss their apparent concerns. LLCI asked to address a meeting of the Advisory Council but this request was declined.

5.3  Land Registry has, consciously or otherwise, repeatedly conflated local authorities’ support for the basic principles of speed, cost and format, and Local Land Charges officers’ willingness to work with Land Registry to ensure it has a full understanding of the Local Land Charges service, with support for its proposals. Annex E of the current consultation repeats this misleading point of view.

5.4  As examples of this, a Land Registry representative was quoted in July 2013 as telling District Chief Executives that “80% of LLC officers support LR’s proposals”[9]. Land Registry has used the terms “Champion” and “Positive” to describe authorities’ views without specifying what authorities might be championing or be positive about. In October 2013 Land Registry reported that “76% [of local authorities] visited agree with the proposal in terms of standardisation” but provided no (undoubtedly very low) figure for those considering Land Registry’s proposals to be the best way forward for the service.[10]

5.5  Land Registry’s statements misrepresent the position of local authorities and Local Land Charges officers. A survey of Local Land Charges officers by a LLC officer on the LLCI website in September 2013 showed that while 79% supported the [re]introduction of a standard fee and 76% supported the digitisation of registers, only 3% supported a Land Registry takeover of LLC1 and CON29 services and none supported a takeover of just the LLC1 service.

6.    Is Land Registry capable of providing an efficient and effective Local Land Charges service?

6.1  In March 2011 the Local Land Charges Institute responded to the Land Registry’s announcement of its takeover proposal[11]

“LLCI acknowledges potential benefits in property information being provided by a national body such as Land Registry (LR). These benefits could include the provision of standardised search reports across the country upon payment of nationally set fees. A national LLC service could also facilitate the electronic provision of information in areas where this is not currently available. By becoming a national service, however, Local Land Charges could risk losing the advantages that are implicit in its name i.e. local knowledge, accessibility and accountability.”

6.2  LLCI identified the following areas of concern:

• Local authorities (LAs) currently provide LLC services computerised to varying degrees (and in a few cases not at all), using a variety of bespoke and other IT systems. LR would need to demonstrate that it could commission and support an IT system capable of matching the service provided by different IT systems in 350 LAs nationwide.
• LA and LR property databases would need to be fully matched to enable accurate data transfer and maintenance. Not all property databases are currently fully matched even within individual LAs.
• LLC officers currently ensure that hundreds of different kinds of information, affecting from one to several thousand properties, are registered in the right part of their varying registers/databases and against the right property(ies). This is generally based on many years’ experience and local knowledge and with varying local procedures. LR would need to be able to guarantee that it could manage this task with no disruption to service provision and/or accuracy of data.
• The signing of detailed Service Level Agreements (SLAs) or similar contracts between LAs and LR would be essential. Optimum arrangements for data transfer would need to be identified e.g. individual departments transferring data to LR, or a single nominated contact within each authority (akin to a current LLC officer) collating and transferring data.
• Most queries that LLC officers have about properties, registrations and other data are currently resolved by contact on one site with officers within the same authority.  LR would need to show that this could be done with data providers (LAs) and registrars (LR) hundreds of miles apart and with the latter having little or no local knowledge.
• LAs currently certify official searches. If LR were to certify searches clarification would be needed as to whether LR or LAs would be responsible for any errors.
• Requests following receipt of completed searches for clarification of entries on them, and the provision of copies of documents referred to therein, are currently handled within LAs. Clarification would be needed as to whether this work would be transferred to LR or remain the preserve of LAs.
• Clarification is needed as to how, if at all, personal searches[12] would be provided. Clarification is also needed as to whether LAs (as originators of information) and/or LR (as holder of information) would be required to make information available under the Freedom of Information Act and/or Environmental Information Regulations.
• New legislation would be needed to transfer the LLC function from LAs to LR.
• Clarification would be needed as to possible financial implications for LAs and fees payable to LAs by LR for use of their data.
• LR might wish to consider piloting new arrangements before proceeding to a national scheme, possibly in areas where the allocated LR office for a local authority is within that authority’s administrative area.

6.3  Of these matters, few seem to have advanced to a stage at which the proposal can properly been taken forward. Let us address just the first point in some detail here.

6.4    Land Registry figures[13] show an average of over 62,000 property transactions per month in England and Wales from April to July 2013. In October 2013 local authorities processed approximately 100,000 official and 50,000 personal searches.[14] There are currently over 20,000,000 entries on local authorities’ Registers of Local Land Charges and in October 2013 these authorities made approximately 65,000 updates to their Registers. [15] Land Registry has taken a year to develop a prototype which in four months from July 2013 has processed an average of 500 searches per month and “processed” 1,000 charges.[16] These charges are generally of the simplest kind, affecting only one property each.

6.5  Dedicated local authority Local Land Charges IT systems have been in use for over 20 years, and undergone continual development with their partner software providers in the private sector. Land Registry has spent a year, and £1.3m[17], to produce a system which is in no way capable of coping with the volume and complexity of searches and data that local authorities deal with on a daily basis.

6.6  Land Registry now proposes to abandon not only its nascent system but also all the existing tried and tested local authority systems, and develop a completely new untried and untested system. This may or may not, in a live environment, be able to handle the nationwide demand for searches and the volume of minute by minute amendments to the Registers that ensure their currency, accuracy and reliability.

6.7  The lack of resolution of this and of the other identified areas of concern is too great for you to approve this proposal.

7.   Is Land Registry sure of its own intentions and their impact on the search service?

7.1  Over the last three years Land Registry has consistently appeared uncertain as to what service it would provide and how it would provide it. These issues have still not been resolved. The property market and its component parts (including the search service) are too important to the national economy for its future to be subject to a proposal which is ill-conceived, and would be detrimental to the service currently provided.

7.2  Land Registry originally intended taking over the Local Land Charges service in its entirety. It would create, hold and maintain one centralised, national Register of Local Land Charges and a database of the information needed to answer questions on the CON29 form(s). After over a year of studying the problems inherent in trying to do this, in 2012 Land Registry announced that it would no longer try to create and maintain the CON29 database. It would instead act as a conduit for the flow of this information between local authorities and conveyancers.

7.3  In doing this, Land Registry has abandoned the main rationale for its proposal – that it would provide a single integrated service for local searches. In abandoning its proposal to compile and provide CON29 information Land Registry recognises that to do so is both the more complex and more costly element of the service local authorities provide.

7.4  Land Registry does not appear to appreciate that processing local authority searches cannot readily be split into separate activities. Information on the LLC Register may start as a CON29 answer, become a LLC Register entry and then revert to a CON29 answer. Local authorities work on both parts of a search at the same time, comparing and checking the information on both before sending a single combined reply.

7.5    Land Registry says it will reduce the average time taken to process local authority searches. However, where a local authority currently completes searches in one or two days it is likely that conveyancers will have to wait longer under Land Registry as the request for a search would have to go to the local authority via Land Registry. At the moment Land Registry is not able to say how long it will take to process searches.

7.6 Land Registry proposes only to show information on searches that is less than 15 years old. This betrays a fundamental lack of understanding of Local Land Charges and of the importance of the information shown on local authority searches. To use just a few examples, the majority of conservation areas, Tree Preservation Orders and Buildings of Special Architectural or Historical Importance were designated more than 15 years ago but are vital pieces of information for prospective property purchasers. The consultation document gives no explanation for this proposal, and the Impact Assessment contains no assessment of its possible impact.

7.7    Land Registry cites delays in processing time by local authorities as part of its rationale for taking over the service. Of course, if local authorities were only required to provide the very limited service Land Registry proposes, the authorities’ task would be much easier and such delays as there are would be even more limited.

7.8    Land Registry seems uncertain as to when it proposes to take over the Local Land Charges service. Section Three: Implementation Plan of the Land Registry Report states that the project will end in September 2016 (with migration starting even before the necessary legislation is in place) while the Impact Assessment states that migration will take place “in the 3 years beginning 2015/16”.

8.     The Future of the Search Service

8.1    Local authorities currently have a statutory obligation to maintain a Register of Local Land Charges and process searches of it. If this obligation were to be removed there is a risk that they would decline to have any involvement in the local search process. Because the CON29 is non-statutory it is not difficult to imagine a local authority closing its Local Land Charges office when it no longer has a statutory obligation to process searches and may not have the resources to do so.

8.2  Without a Local Land Charges office it is not clear who in an authority would provide answers to CON29 questions. Information to answer the questions comes from a range of departments across each authority (or across two authorities at district/county level). As the LLC Register and the CON29 are so interlinked, if Land Registry were to maintain the Register instead of local authorities the authorities may not even be able to answer the CON29 form.  They would not be able to carry out the essential cross–referencing between the Local Land Charges Register and the CON29 answers.

8.3  Land Registry has yet to state how its CON29 system would work, nor whether it intends its legislation to introduce a statutory requirement for local authorities to provide it with CON29 answers, nor how its system would be funded, nor whether it would meet the costs local authorities incur in providing the service.

8.4  In this, as in so many other matters, there is far too much uncertainty for you to approve this proposal. We urge you to reject it.