Land Registration Bill [Lords]

Public Bill Committee, 11 December 2001.

Standing Committee D

Land Registration Bill [Lords]

Michael Wills (Labour, North Swindon)

I beg to move,

That, during proceedings on the Land Registration Bill [Lords], the Committee do meet on Tuesdays at half-past Ten o'clock and at half-past Four o'clock and on Thursdays at half-past Nine o'clock and at half-past Two o'clock.

I start by welcoming you to the Chair, Mr. Illsley. We had a relatively brisk and good-natured discussion on Second Reading and I am sure that our Committee proceedings will be similarly good-natured and informative. We look forward to conducting them under your sagacious chairmanship.

Question put and agreed to.

Eric Illsley (Labour, Barnsley Central)

Copies of the financial resolution connected to the Bill are available in the Room. I remind Members that adequate notice should be given of amendments. As a general rule, I do not intend to call starred amendments.Clause 1 Register of title

Clause 1 - Register of title

Adrian Sanders (Liberal Democrat, Torbay)

Is this the point at which I move the amendment tabled in my name?

Eric Illsley (Labour, Barnsley Central)

No. No amendments to clause 1 have been selected. This is a clause stand part debate.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Clause 3 - When title may be registered

Bill Cash (Conservative, Stone)

I beg to move amendment No. 1, in page 2, line 22, at end insert—

''and if the final period of right to possession expires more than fourteen years after the date of the application under subsection (2)''.

Eric Illsley (Labour, Barnsley Central)

With this it will be convenient to take the following amendments: No. 6, in clause 4, page 3, line 32, at end insert—

''( ) For the purposes of subsection (1)(c), a lease granting a right of possession which is discontinuous creates a term of years absolute of more than fourteen years from the date of the grant if the final right to possession expires more than fourteen years after that date.''.

No. 19, in clause 15, page 9, line 9, at end insert—

''( ) For the purposes of subsection (3)(a), a lease granting a right of possession which is discontinuous creates a leasehold estate in land granted for a term of which more than fourteen years are unexpired if the final right to possession expires in more than fourteen years time.''.

No. 28, in clause 27, page 12, line 13, at end insert—

''if the final period of right to possession expires more than fourteen years after the date of the disposition.''.

No. 63, in clause 80, page 29, line 8, at end add—

''( ) For the purposes of subsection (1)(b)(i), a lease granting a right of possession which is discontinuous creates a term of years absolute of more than fourteen years from the date of the grant if the final right to possession expires more than fourteen years after that date.''

Bill Cash (Conservative, Stone)

First, I welcome you to the chair, Mr. Illsley. As the Parliamentary Secretary has already said, we had a perfectly congenial Second Reading. This is a very technical Bill, and I pay tribute to those in the Law Society and the Chancery Bar who have helped us to formulate our views on the subject.

I also pay tribute to the other House, where most of these matters have been exhaustively discussed and canvassed in Committee and on Report, with great expertise. Because of that, and because this is a Law Commission and Land Registry Bill backed up by enormous expertise and the assistance that I have mentioned, it will be unnecessary for us to prolong the proceedings unduly. That would be to engage, in effect, in repetition of what has already been discussed—with several important exceptions. I shall treat the Committee stage in that light.

The amendments relate to non-continuous leases and situations in which title may be registered. Their object is to achieve consistency and avoid making the register over-saturated. We believe that non-continuous leases should be registrable only if they are to last for at least 14 years. I should add that a discontinuous lease is one that is granted for, say, a fortnight each year. Several timeshare developments have been documented in that way, but the system could conceivably be used in other ways. I discovered the example of the letting of a site to a regularly visiting fair, and in a VAT case it was held that the letting of a lease for one week a year for 80 years constituted a lease for 80 weeks.

The Bill provides that all discontinuous leases be registered, but the regrettable truth is that that could clog up the register to no obvious advantage. On the other hand, to apply the general time qualification, even if it were as low as seven years, would exclude almost all such leases from registration. Our suggestion is that one should consider how distant is the final date—the beginning of the last week or fortnight—on which the tenant would be entitled to take possession. If that date were as distant as the normal period of qualification for registration, the non-continuous lease would be registrable.

There is a further reason for accepting the amendment. Under the Bill as drafted, if the parties to the lease wanted to register a lease for less than 14 years or less than seven years, they could do so by creating a lease with a short break of, for example, one day. That would make it non-continuous and, according to current proposals, registrable. Again, that would result in the register's being unnecessarily and unjustifiably saturated.

It has been common practice to let grazing tenancies for less than a year to avoid the effects of the Agricultural Holdings Act 1984. Theoretically, a tenant is not entitled to occupy the gap between two tenancies, but none the less, animals often remain on the field continuously. Who could say that mid-tenancy breaks inserted to make a lease registrable would not be treated with the same disregard?

Amendment No. 28 deals with the issue of very short leases. Under the Bill, a cottage rented for a week at Easter half term will have to be registered—a situation that I would not have thought was intended.

Michael Wills (Labour, North Swindon)

I understand the hon. Gentleman's concerns, but the Bill's general approach is based on the principle that it is desirable to register timeshare leases of whatever length. They impose a significant burden, and unless registered they can be difficult to discover. People inspecting the affected land may not become aware of such leases if they inspect during a non-timeshare week or any other such period. Registration will also benefit owners of timeshare leases by giving them the protection of the state guarantee, and by making it easier and cheaper to deal with their land. The Bill therefore provides that a timeshare lease of any length granted out of unregistered land may be registered, and that one granted out of registered land must be registered.

In the case of timeshare leases granted out of unregistered land, including leases by the Crown out of demesne land, compulsory registration of such leases, or of relevant assignments, applies when there is more than seven years to run. That exception to the general approach is made because the same provisions that apply to the vast majority of unregistered leases ought to apply to such timeshare leases. That approach retains simplicity, which should assist legal practitioners and citizens.

I fully understand the hon. Gentleman's desire not to clog up the registers of titles with many entries for discontinuous leases. I hope, however, that I can reassure the Committee that there is little prospect of that. First, registration will fulfil a fundamental objective of the Bill by making available as much information as possible about a title through inspection of the register. Secondly, timeshare leases are comparatively rare. Thirdly, and most importantly, the length of a discontinuous lease is calculated by totalling the number of periods of occupation to which it entitles the leaseholder. For example, a three-year lease which gives the right to occupy the property for one month in 12 will cover a period of 36 years. Finally, a timeshare lease for seven years or less when the discontinuous periods are added together can be protected by a caution against first registration.

One effect of amendment No. 19 would that where there was such a lease and the discontinuous periods were to end after more than 14 years, the lease could not be so protected. We believe that the balance struck by the Bill as it stands is better, as the same provision applies to all unregistered leases.

I hope that that explanation provides some comfort to the hon. Gentleman and that he will feel able to withdraw the amendment.

Bill Cash (Conservative, Stone)

Having listened to the Minister's arguments, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Bill Cash (Conservative, Stone)

I beg to move amendment No. 2, in page 2, line 27, after 'is', insert 'only'.

This is a short and self-explanatory amendment. A person who contracts to buy and pays without taking a transfer, whom the owner would hold as a bare trustee, should be entitled to apply to register. A person who contracts and pays for the property should be the person who registers and not merely the bare trustee. I hope that that makes the position clear and I look forward to hearing what the Minister has to say.

Michael Wills (Labour, North Swindon)

I am grateful to the hon. Gentleman for making his intentions clear. I must resist his amendment, but I shall take a little time to explain why.

On Report in another place, Baroness Buscombe described the effect of a similar amendment and said that the Law Society felt that subsection (6) was unclear and that the purpose of the amendment was to clarify the situation. The Law Society seems to have been trying to achieve a situation in which, although someone entitled by contract alone could not apply for first registration, someone who is entitled by contract and in some other capacity could. In reply, my noble Friend Baroness Scotland explained at length why the amendment was unacceptable. I presume from its re-emergence that the Law Society is still unsatisfied, so I shall explain why the alleged clarification is still unacceptable.

Subsection (2) provides that a person who is entitled to require an unregistered but registrable estate to be vested in him or her can apply for first registration as proprietor. Subsection (6) states that such a person cannot apply if his or her entitlement is as a person who has contracted to buy under a contract. Let us suppose that a Mr. Smith has contracted to buy a piece of unregistered land—let us call it Swindon fields—from a Mrs. Jones, and that Mr. Smith has paid the full purchase price. Mrs. Jones holds Swindon fields as bare trustee for Mr. Smith. If, as in the normal course of events, Mrs. Jones executes a conveyance to Mr. Smith, that conveyance will trigger first registration. If there is no conveyance, the bare trust continues.

The purpose of the amendment is to allow the buyer, Mr. Smith, to apply for first registration because he is also entitled as the beneficiary under the bare trust that arose when he paid the full purchase price. If the amendment were accepted, Mr. Smith could then apply for registration at his own convenience. That is not acceptable, because the policy of the Bill is to encourage registration and to get as much land as possible on the register. That is why the Bill does not allow Mr. Smith the option, but encourages him to take a conveyance, trigger the first registration and have the land registered. I believe that everyone agrees with the general desirability of registration, and I hope that the hon. Gentleman will withdraw the amendment.

Bill Cash (Conservative, Stone)

In the interest of clarity and further explanation since the matter was discussed in the other place, I am delighted that we have had that further amplification, which will be noted with great interest by the Law Society and practitioners. That was the purpose of the amendments, irrespective of whether we pressed them to a vote. Although some deplore it, proceedings in Parliament are increasingly taken into account in judgments. I am grateful for the Minister's comments and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 ordered to stand part of the Bill.

Clause 4 - When title must be registered

Bill Cash (Conservative, Stone)

I beg to move amendment No. 3, in page 3, line 8, leave out 'seven' and insert 'fourteen'.

Eric Illsley (Labour, Barnsley Central)

With this it will be convenient to take the following amendments: No. 5, in page 3, line 24, leave out 'seven' and insert 'fourteen'.

No. 18, in clause 15, page 9, line

7, leave out 'seven' and insert 'fourteen'.

No. 26, in clause 27, page 12, line 11, leave out 'seven' and insert 'fourteen'.

No. 62, in clause 80, page 28, line 29, leave out 'seven' and insert 'fourteen'.

No. 17, in schedule 1, page 46, line 5, leave out 'seven' and insert 'fourteen'.

No. 31, in schedule 2, page 47, line 29, leave out 'seven' and insert 'fourteen'.

No. 32, in schedule 2, page 48, line 2, leave out 'seven' and insert 'fourteen'.

No. 33, in schedule 2, page 48, line 9, leave out 'seven' and insert 'fourteen'.

No. 35, in schedule 3, page 49, line 10, leave out 'seven' and insert 'fourteen'.

Bill Cash (Conservative, Stone)

We are now heading into much more contentious waters. In general terms, the amendments are designed to relieve small businesses, the agricultural community and some residential occupiers of the burden of registration for little, if any, benefit.

The Law Society's suggestion, which has already been traversed in the House of Lords, is that leases should be registrable only if they are for a term of at least 14 years instead of the seven years proposed in the Bill. This is a substantial issue. I know that the Minister has heard the arguments and has in front of him voluminous papers that will give us further opportunities to examine the question, if not at such fantastic length as is theoretically possible.

The case for lengthening the period is that it would reduce the number of leases that will have to be registered to no good purpose. Registration is carried out at the expense of the tenant, who pays both Land Registry and professional fees. Some of the leases in question would be of residential premises, adding to the cost of home ownership. The majority will probably be of business premises, and some will be of agricultural premises. The cost will become an overhead that adds nothing to the profitability or productivity of a business.

The three principal reasons for registering a lease are: to ensure that the tenant has a secure title; to facilitate transfers; and for public information. Under almost all short leases, tenants will be in possession themselves. That protects their title adequately so that registration is unnecessary on that account. The shorter the lease, the less likely it is that it will be transferred during its lifetime. Certainly, some leases of seven to 14 years' length will be transferred, but their number will not be great enough to justify the expense of registering them all.

Most commercial leases contain five-yearly rent reviews, so leases are commonly five, 10, 15, 20 or 25 years in length. At present, only 25-year leases need to be registered. The obligation to register leases of 14 years would catch the other substantial terms of 15 and 20 years, which was the reason for selecting it. The longer the lease, the more likely it is to be transferred and the more likely it is that the benefits of registration would outweigh the burdens.

The only substantial public information reason for registration appears to be to give information for rent reviews. That is misleading. On a rent review, the comparative data used as evidence are known as ''comparables'', and it is important that the other transactions cited do indeed bear comparison. An important factor is the security of tenure that the tenant enjoys. The information that rent reviews in seven-year leases use would be available for reviews under much longer leases. However, the disparity between the lengths of the leases would seriously reduce their value as comparables. In addition, other terms of the lease must be equivalent in such matters as repair obligations and restrictions on use. That information is contained in the lease and when a lease is registered a copy is lodged with the registry, but it is not made public. Registration would not ensure that the available information on rent and length of term would be useful.

The Bill contains powers to reduce the term of registrable leases, and we would suggest proceeding by a stepped reduction from the current 21-year period to a 14-year period. In future, perhaps when electronic conveyancing is familiar to most conveyancers, that figure should be reduced to seven years. That would allow the impact on the Land Registry and the commercial property market to be felt before moving, probably irreversibly, down to the short term proposed by the Government.

Michael Wills (Labour, North Swindon)

The amendment, which is an old friend, stands with nine others of identical wording with which it would take collective effect. Those who have been involved with the Bill for some time have seen this idea in various shapes and forms in discussions and debates in the other place. We must resist the amendment because there is a fundamental difference between its supporters and us.

The Government believe that the progressive extension of registration over the past century is one of the great success stories in the reform of the law and public services. That applies to the extension of registration to leases in general and commercial leases in particular. The general case is clear: registration involves additional investment and more work for the conveyancer on registration. Both those costs are relatively small compared with the overall cost of drawing up a lease, let alone the value of the transaction—this is an investment in which we can spend to save. When the lease is not registered, any significant subsequent transaction would require the initial conveyancing work to establish the title from the head lease and from the lease itself to be redone, with all the consequent costs. That effort is unnecessary when the lease is registered, and a great deal of unnecessary and expensive work would therefore be saved. When the lease permits the granting of rights over land, issues such as rights of way or shooting and fishing rights would become easier in a registered system. The Bill also significantly improves the protection that can be given to shooting and fishing rights.

Lynne Jones (Labour, Birmingham, Selly Oak)

Is the Minister aware that the Law Society has expressed concerns about the ability of the Land Registry to cope with the additional number of registrations that would apply in this case? Is he confident that the Land Registry can cope? The Bill's aim is to speed up the process, and we would not want to clog up the system with unnecessary work.

Michael Wills (Labour, North Swindon)

I am grateful to my hon. Friend for raising that important concern. Baroness Scotland has already provided reassurance on the matter in another place, where she quoted the chief land registrar. One reason why we fixed the limit at seven years is that we have a great deal of information about leases of that length and longer, which enables us to be confident that the Land Registry can cope.

It is important that we are clear about the benefits that setting the level at seven years can bring. I have examined what we know about the number and value of leases. Although we have particular information about certain groups of leases, for example seven-year leases, the overall figures are murky. Registration will allow us to shed light on that, and it will become possible to prepare detailed figures on the length and value of leases.

That is just the start. The quinquennial review of the Land Registry's work, prompted by suggestions from the commercial property market, has made detailed and very valuable suggestions for how those figures could be combined with others held by Government—particularly by the Valuation Office Agency—to enable to publication of enhanced and co-ordinated information on types of property, floor areas, and the broad terms per square metre for leases of various commercial property types and periods. That could show how price levels, leasing terms and rents vary between regions and districts. For example, the figures could be at the level of local postcode districts.

The registry already publishes monthly figures on the domestic freehold market, which are widely recognised as the most authoritative in showing how the market is changing over time. The quicker registration is extended to leases and the wider the bands of leases included, the quicker similar information can be provided for leasehold property. The report records strong support for that from, among others, the Royal Institution of Chartered Surveyors and the Government's property advisory group.

In broad terms, that is why the Government think that leaseholders should and will welcome the Bill. Its proposals will create greater transparency in the market, which must benefit all businesses, and lessen the burden of transactions on the lease undertaken subsequently, through registration. Not everyone will benefit in the same way and to the same extent. Some leases do not change hands, as the hon. Member for Stone (Mr. Cash) suggested, although many commercial leases will benefit from savings where there are incidental transactions.

My own experience before I entered the House suggests that the commercial property market is becoming increasingly flexible. Leases are getting shorter and changing hands more often. Anything that encourages that is likely to benefit small businesses, in particular. All will stand to gain from a dramatically more transparent and efficient market overall.

I understand people's concerns that the Government are trying to move too fast. We have listened very carefully to those voices and tried to identify exactly what problems are foreseen. We have talked about possible additional costs to the end customer and I have explained why the Government believe strongly that the balance is extremely positive for the customer.

There may be some additional work for the professions, but I find arguments about that unconvincing. A well-organised conveyancer is likely to prepare the materials needed for a registration application in parallel with work on drawing up the lease. We estimate that the additional work required will take an hour at the most, and probably less. As my hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones) suggested, there will be more work for the Land Registry, but it has assured us that it can cope and that the additional work can be absorbed without prejudice to the extremely high level of service that has just won it its fourth charter mark in a row. I can only repeat its assurances.

I should also point out that the changes will not bear on the profession and the Registry immediately. The Bill's general registration provisions are not likely to be brought into force until mid–2003 at the earliest. There is therefore ample time to get the operation in order. Overall, the changes will benefit leaseholders and businesses. Far from being a burden on small businesses, these practical measures will assist them considerably.

Bill Cash (Conservative, Stone)

Will the Minister address one or two points? Surely, if the experience of a limited change suggests that a further reduction is desirable and will not overstretch the industry, that reduction could be made by order, after consultation under clause 5. Why can we not have a little more time to consider and observe this in operation and then, after consultation, bring in new provisions by order?

How many leases of between seven and 14 years are likely to be registrable, and how is that figure arrived at? Can the Minister assure us that from the beginning the registry will be able to be cope with the work load without difficulty? Can he also give an indication—if not now, later—of the fees for registering a seven-year lease?

Michael Wills (Labour, North Swindon)

Let me start addressing those questions by again stating that we have been categorically reassured by the Land Registry that it can cope with what is being proposed. I urge all those who remain concerned about the possibility of extra work from extended registration to talk to the Land Registry. It is important to recognise that the registry has historically shown itself to be an organisation fundamentally concerned to help in the business of buying and selling land, not to hinder it. I am confident that the registry would not have given us such an assurance unless it could deliver on it.

The hon. Member for Stone asked why we could not wait to extend registry to seven years, and do it under order. We want to extend the benefits of registration as quickly as possible, and as was said in another place, our intention is to bring the level of registration down to three years when we are confident that the profession and the Land Registry are ready to deal with that. In the meantime, we want to move as quickly as possible to expand the boundaries of registration as widely as possible. We know that we can cope with seven years because, for various reasons, we have more information about leases for seven years and 14 years than about other leases; the information on leases between three and seven years is somewhat murky. Leases of more than seven years must be declared to the district valuers and we have information about them—that is the basis of the assurance that we received from the Land Registry.

The hon. Member for Stone asked me for some figures on the cost to register leases. Fees are calculated by value and the maximum is £800 for the most expensive. The figures can be quite complicated, so rather than trawling through my files and holding up Committee proceedings I will write to him.

Bill Cash (Conservative, Stone)

I am grateful for the assurance that we will get the figures. However, as the Minister knows, such matters have already been raised in the other place and it seems extraordinary that we are in the position of not having accurate figures at this stage. When one is dealing with questions that relate to the length of leases, and the dramatic change that that represents, a huge number of people may be affected—I could not put a figure on how many and nor could anyone. The cost of the operation and the extent to which it will impose difficulties, is therefore of interest to the public.

It was acknowledged, even in the report that led to the Bill, that no consensus emerged, despite huge efforts to achieve one. Now that the Bill has been through the other House, and various reports and consultations have taken place, there remains no consensus. I ask myself why the Government are so insistent. I have heard the Minister's argument, but the issue is contentious and one on which there is no resolution. My troops have just arrived, so I am now in a position to advise the Minister that we intend to divide the Committee on the amendment.

Michael Wills (Labour, North Swindon)

Before the hon. Gentleman does that, he need no longer be astonished that we do not have the figures. I simply did not want to delay the Committee on something that was not salient to his point. However, while he delayed the Committee with his further intervention, I took the opportunity to find the figures in my files and can now give them to him.

In the financial years 1999–2000 and 1998–99, the stamp office stamped some 75,000 and 100,000 new leases respectively. The overwhelming majority were already registrable, but 9,000 and 12,000 respectively were for between 14 and 20 years, and 11,000 and 17,000 respectively were for between seven and 13 years. The Land Registry can therefore expect the Bill's proposals to result in between 20,000 and 30,000 new leases, plus assignments of extant unregistered leases where the un-expired residue exceeds the relevant minimum. Figures on leases from the investment property data bank are of the same order, but the figures should be seen in the context of the overall work load. In 1999, the Land Registry received 373,000 first registrations and more than 3 million applications to change the register following a dealing with the whole or part of the registered estate. Figures of 20,000 to 30,000 should therefore be compared with 3 million and 373,000. It is against that background that the chief land registrar has offered his assurances.

Figures on leases are extremely complicated and would take a very long time to explain. It should suffice for our purposes to point out that the maximum fee is £800. Given that leases can be worth millions of pounds, and given the legal and other professional costs involved in such huge commercial transactions, I hope that the hon. Gentleman will accept that such fees are relatively insignificant.

I hope that I have reassured the hon. Gentleman sufficiently. I hear what he says about pressing the matter to a vote, and if he is still minded to do so despite my persuasive arguments to the contrary, that is a matter for him. However, I hope that he will think again and accept our compelling arguments.

Bill Cash (Conservative, Stone)

I am certainly grateful to the Minister for that additional information, and I admire the way in which he fished it out of his incredibly complex documents. It helps to get such matters on the record, but substantial questions remain unanswered that underpin our objections to the Bill. We shall therefore press the amendment to a vote.

Question put, That the amendment be made:—

The Committee divided: Ayes 3, Noes 8.

Bill Cash (Conservative, Stone)

I beg to move amendment No. 4, in page 3, line 14, at end insert—

', unless at that date the person to whom the grant is made is the tenant of the whole of the land comprised therein for a term which is not registered (and is not subject to the requirement of registration) and will expire on or after the date on which the estate granted will take effect in possession'.

Eric Illsley (Labour, Barnsley Central)

With this we may discuss the following amendments: No. 27, in clause 27, page 12, line 27, at end insert—

', unless at that date the person to whom the grant is made is the tenant of the whole of the land comprised therein for a term which is not registered (and is not subject to the requirement of registration) and will expire on or after the date on which the estate granted will take effect in possession.'.

No. 37, in schedule 3, page 49, line 31, at end insert—

', unless at that time the person to whom the grant was made is the tenant of the whole of the land comprised therein for a term which is not registered (and is not subject to the requirement of registration) and will expire on or after the date on which the estate granted will take effect in possession'.

Bill Cash (Conservative, Stone)

The amendment would remove the need to register a lease that takes effect in possession more than three months after it is granted, if registration is not otherwise required, and where such a lease is a renewal of an existing lease to a tenant who is already in possession. The need for such a reversionary lease is explained in paragraph 3.32 of the report that preceded the Bill. If it is not registered, the buyer of a landlord's interest may not be able to find out about that before their term begins, because the tenant would not be in possession. That objection does not apply where the reversionary lease is a renewal to an existing tenant. In that situation, there is no practical need for such a lease to be registered merely because it does not take effect at once. Under the Bill as drafted, a renewal for a year or less, granted during mid-summer for a lease that will expire at Michaelmas, would be registrable and, as we said, would attract.

The amendments would restrict a reversionary lease to a tenant whose existing lease is not subject to registration. We accept that a tenant who is within the registration system can reasonably be required to register a renewal. When a tenant is not already within the system, the balance of advantage is emphatically on the side of our amendments. A buyer of the landlord's interest would have to establish the tenant's rights, and it would surely impose no real burden to require such a buyer to ask not only whether there is a lease but whether there is any other relevant document. A tenant renewal on a comparatively short lease—

Eric Illsley (Labour, Barnsley Central)

Order. I apologise for interrupting the hon. Gentleman in mid-speech, but I should point out that the hon. Member for Birmingham, Erdington (Mr. Simon) is not a member of the Committee and is therefore not allowed to remain in the Room.

Sitting suspended.

On resuming —

Adrian Sanders (Liberal Democrat, Torbay)

On a point of order, Mr. Illsley. Given the break that we have just had, there are no objections from Opposition Members to the hon. Member for Birmingham, Erdington joining the Committee, if that is an issue.

On Thursday, the Liberal Democrat Whips Office was told that this meeting was yet to be arranged and we were not informed at any point about when it was to be held. Although cards were issued stating that the Committee was meeting today, they were not drawn to my attention until yesterday morning, by which time it was too late for us to table amendments. I want to put that on the record.

Eric Illsley (Labour, Barnsley Central)

With regard to the membership of the Committee, there has been some confusion as to the attendance of the hon. Member for Birmingham, Erdington. Obviously, no one objects to his presence, but unfortunately the Chairman has to abide by the Committee of Selection's choice of members, and because his name does not appear on the list, I cannot accept his being in the Room. It is not a question of whether anyone objects.

On the issuing of cards, again it would appear that there may have been some confusion as to the membership make-up of the Committee. I will ask that that be looked into, in the hope that it will be rectified for the future.

Bill Cash (Conservative, Stone)

Further to that point of order, Mr Illsley. In all my 18 years in Parliament, I have sat on a vast number of Committees, and I have never witnessed this before. I must say that I am beginning to get quite used to some fairly unusual things happening in Committee. I need not refer in detail to what happened on my first outing as an Opposition spokesman, but on that occasion the order was withdrawn, at any rate for the time being. I am told that it was then rectified, although I am not convinced about that. This time the matter cannot be rectified, at least for the time being. The appearance, sans tie and no doubt armed to the teeth with intellectual vigour, of the ex-member for The Daily Telegraph, now the hon. Member for Birmingham, Erdington, caused a certain amount of amusement when he arrived extremely late, even though he thought that he was expected to be here.

I have for many years been captain of the Lords and Commons cricket team, and I have played many a game with less than the prescribed 11. Given the vast superiority of the firepower on the other side, in terms of numbers if not quality, I am sure that the Government will continue to win the votes, but we shall continue to press our case.

Eric Illsley (Labour, Barnsley Central)

I am grateful for the hon. Gentleman's comments. We are involved in a unique situation. Is he prepared to resume debate on the amendment?

Bill Cash (Conservative, Stone)

I would be absolutely delighted to do so. I do not want to delay this any longer than is necessary, for all the reasons that I have already given. I will take up where I left off, and repeat what I said just before this rather unusual suspension.

The amendments are restricted to a reversionary lease to a tenant whose existing lease is not subject to registration. We accept that a tenant who is within the registration system can fairly be required to register a renewal. When the tenant is not already within the system, we think that the balance is on the side of the amendments.

I have picked up the threads of what I was saying before, because I am not sure how much got on the record the first time round. A tenant renewing a comparatively short lease may well do so without specialist advice. The Bill as it stands would create a very significant trap. If the renewed lease is registrable, but unregistered, it will always be ridden by a disposition of the landlords interests, not only before it falls into possession, but at any time during the renewed term.

Paragraph 1(a) to schedule 3 will stop a registrable reversionary lease from ever being an overriding interest in the common situation in which the landlord's interest is registered.

Michael Wills (Labour, North Swindon)

I should say in defence of my hon. Friend the Member for Birmingham, Erdington, who has just departed, that he did not receive a card inviting him to attend the Committee, and his lateness was due to the fact that he was informed only shortly beforehand that he was expected—erroneously, as it now appears. That may have had something to do with his tieless state, to which the hon. Member for Stone referred. He was probably in such a hurry to get here that he did not want to delay by putting on a tie. On the other hand, it may have been a fashion statement. He will have to answer for that himself.

The provisions that would be altered by the amendments are based on a recommendation in the Law Commission and Land Registry's joint consultative document. Everybody who responded to that recommendation supported it.

The amendments would place intending buyers in an unreasonable position, because they could not tell from the register whether the land was subject to the reversionary leases that the amendments would exempt from registration. That is, they could buy the land only to discover that the existing tenant had a right to a further lease, which could very well be for a considerable time. Obviously, that could significantly reduce the value to them.

Under the Bill, intending buyers would not have to inquire of an existing tenant whether the tenant also held a reversionary lease covered by the Bill. Under the amendments, they would, even if the proposed seller had produced a copy of the tenant's lease and the lease did not contain, say, an option to renew the lease.

Moreover, the first two amendments do not require the renewed lease to be granted to a tenant in occupation, so if the tenant's existing lease is some sort of reversionary lease, inquiry of the tenant in occupation would not be of the right person. If the proposed purchase involved a large portfolio of properties, for example as part of a large estate, the intended buyer's problems would be even greater.

If we accepted the amendments, the Bill's objective of making the register as comprehensive as is reasonably possible would be damaged. A less comprehensive register would affect e-conveyancing, because for that to work effectively a buyer will need to be able to rely on the register entries to the fullest extent possible and have to make only a few inquiries. Those inquiries should not be about whether the land is subject to the type of reversionary lease covered by the Bill.

I hope that in the light of that explanation the hon. Gentleman will feel able to withdraw the amendment.

Bill Cash (Conservative, Stone)

As ever, I am grateful to the Minister for his explanation. In the expectation that we will be able to consider these matters in further detail as we proceed, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Bill Cash (Conservative, Stone)

I beg to move amendment No. 7, in page 4, line 2, at end insert—

'subject to subsection (3), ''transfer'' has the same meaning as ''convey'' in the Law of Property Act 1925 (c. 20);'.

The amendment relates to a dealing with unregistered land under which any such dealing that leads to compulsory registration of title can still be done in the old form of a conveyance rather than a transfer. I should make it clear, however, that compulsory registration would still follow. Traditionally, land then unregistered was transferred by conveyance. The abbreviated modernised transfer form was introduced to registered land and has recently been redesigned. To encourage modernisation, it has for a long time been the case that unregistered land that would be registered immediately after a transfer transaction can be transferred by using a transfer registration form.

Under the Bill, it will continue to be in order for unregistered land to be transferred by conveyance, even though compulsory registration of title will follow. It therefore seems necessary to make it clear that when the Bill refers to a transfer in terms of dealing with the levers of compulsory registration, that includes a conveyance.

Michael Wills (Labour, North Swindon)

I am afraid that I must resist the amendment, which was also moved in another place. It is a drafting amendment intended to clarify the meaning of the word ''transfer'' in clause 4.

There is no doubt that it will still be possible to use conveyance rather than transfer to pass a legal estate in unregistered land. I understand the hon. Gentleman's concern, but the amendment is unnecessary because the Bill does not prevent the use of conveyances in such cases. Moreover, it implies that ''transfer'' is used as a verb in the clause, but, as my noble Friend Baroness Scotland made clear in another place, it is used as a noun. It refers to the event of the transfer, not to the type of Land Registry form known as a transfer.

I hope that that clarification will assist the hon. Member for Stone to withdraw his amendment.

Bill Cash (Conservative, Stone)

I am grateful to the Minister for that explanation. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 ordered to stand part of the Bill.

Clause 5 - Power to extend section 4

Bill Cash (Conservative, Stone)

I beg to move amendment No. 8, in page 4, line 20, at end insert 'the Rule Committee and'.

Eric Illsley (Labour, Barnsley Central)

With this it will be convenient to discuss the following amendments: No. 74, in clause 116, page 40, line 15, at beginning insert—

'In addition to the consultation required by section 125(1A),'.

No. 77, in clause 125, page 42, line 7,at end insert—

'(1A) Before making any order under any provision of this Act, the Lord Chancellor shall consult the Rule Committee.'.

Bill Cash (Conservative, Stone)

The amendment would require the Lord Chancellor to consult the Land Registration Rule Committee in addition to other people whom he considers to be appropriate. It is imperative that all interested parties are properly consulted, especially those on whom the Government are relying to implement the system. The Rule Committee should be consulted before the Lord Chancellor exercises the power to amend section 4. It is important that where he does exercise that power, the order should be approved by each House of Parliament. If the Lord Chancellor decides, for whatever reason, to invoke his powers under clause 5, why not consult the Rule Committee in addition to other people whom he considers to be appropriate?

The matter was discussed at some length in the other place both in Committee and on Report, but we are having to make the same point yet again. It is a simple point about consultation. As Baroness Buscombe said in the other place:

''It remains our contention that if we are to have a rule committee, we should have a committee that has broad powers and a strong remit in order to allow it to be used to good, practical effect by the Lord Chancellor of the day to ensure that the right decisions are made.

I echo the words of the Minister''—

that is, Baroness Scotland—

''when she said in Committee,

'Confidence in the system is necessary. Once that confidence has been established, it will be possible for the Lord Chancellor of the day to look again at whether a further reduction is merited, but that would be done at a time that was in line with what the market, the profession and the registry could tolerate with ease'.—(Official Report, 17/07/01; col. 1395.)

We believe that the rule committee would be ideally placed, given its constituents, to signal to the Lord Chancellor when that time may be right.''—[Official Report, House of Lords, 30 October 2001; Vol. 627, c. 1314.]

Adrian Sanders (Liberal Democrat, Torbay)

What is the Rule Committee and who are its members?

Bill Cash (Conservative, Stone)

Members of the Rule Committee are deputed to give advice to the Lord Chancellor about the manner in which rules relating to registration are devised. I cannot give individual names.

Adrian Sanders (Liberal Democrat, Torbay)

Perhaps my question should be addressed to the Minister. Is it not likely that members of the Rule Committee would be consulted by the Lord Chancellor in any event?

Bill Cash (Conservative, Stone)

That is a valid point, but it would be better put to the Minister.

The other amendments are designed to prevent the rule-making power being used to introduce compulsory registration of five-year and shorter leases without further parliamentary consideration. Five-year leases are, indeed, common. They are usually occupational, business, residential or farming leases and are not assigned anything like as frequently as longer interests. There is no pressing practical need to register them, either to ensure that the purchaser and the superior interest find out about them, or to make it easier to buy and sell them.

Not only are five-year and shorter leases predominantly granted to tenants for their own occupation throughout the term and rarely assigned or under-let, the tenant holds all the documentation relevant to the assignee or under-tenant and would still do so were the lease registered. The benefits of registration to the parties would be small.

The Government said in Committee in the other place that registration of short leases would enable information to be collected that would be useful in creating transparency in the market. Even if it is accepted that there is a connected purpose in the long title of the Bill, making tenants register and pay fees for the privilege in furtherance of what the Government present as a general public interest would amount to levying tax. If it is permissible to comment on that, I suggest that that would be an unreasonable tax.

Michael Wills (Labour, North Swindon)

Both of the amendments would require the Lord Chancellor to consult the Rule Committee before making orders under the Bill. The hon. Member for Torbay (Mr. Sanders) asked a question about the Rule Committee and perhaps I can enlighten him. The hon. Member for Stone rightly said that that is the body that gives assistance and advice to the Lord Chancellor when he makes rules on Land Registration. Its current composition is a High Court judge from the Chancery Division, the Chief Land Registrar, a person chosen by the former Ministry for Agriculture, Fisheries and Food, a person chosen by the council of the Law Society and a person chosen by the General Council of the Bar.

The membership of the Rule Committee is to be broadened to include a nominee of the Council of Mortgage Lenders, a nominee of the Council of Licensed Conveyancers and a consumer affairs expert. It will no longer include a person chosen by the former MAFF, but will instead include a surveyor appointed by the Royal Institute of Chartered Surveyors.

I must resist both amendments. Amendment No. 8 deals with the important power given to the Lord Chancellor under clause 5 to extend compulsory registration by order, by adding further events that will trigger first registration. Amendment No. 74 would have a wider effect, making the same requirement in relation to all the order-making powers in clause 116. As a result of Government amendments in another place, the exercise of both those powers will be subject to the negative resolution procedure.

The Government also made a commitment in another place to consult the members of the Rule Committee before making an order under the clauses. Its members will undoubtedly have a valuable contribution to make to any consultation processes undertaken on secondary legislation made under the Bill. I have already described the professional membership of that committee. Its members will bring to the process the professional expertise that took them on to the committee and their experience of serving on it. I am happy to repeat that commitment, but I think that it is all that is required.

The duty to consult on both clauses is worded widely to enable the Lord Chancellor to consult with such persons as are appropriate for the issues being dealt with in the order and at the time. The clauses reflect the formal procedures for the preparation of the rules concerned. We cannot know at this stage when the need for consultation will arise, or what changes might occur in the meantime. It is therefore prudent for the clause not to be more prescriptive.

There is a further, more technical reason for resisting the amendments. When consultees are listed in statute, it can be thought that there is some justification in limiting consultation to those people, or treating their contributions as carrying greater weight than those of others. That is inadvisable when, as in this case, a large number of interests will have to be taken into account in the preparation of rules. I undertake to ensure that the members of the Rule Committee are included in any consultation process under the clauses. The Government maintain that it would be inappropriate and unnecessary to highlight one particular group by mentioning it in the Bill.

I hope that in the light of those commitments, the hon. Gentleman will be able to withdraw the amendment.

Bill Cash (Conservative, Stone)

I am sorry to disappoint the Minister. I understand the generosity that impels him to suggest that there will be consultation, but he referred to our amendments as prescriptive. All I can say is that we believe that there is a strong line for sustaining our position. I regret to have to say this, because it is not one of the most fundamental issues underlying the Bill and the Minister put his contribution in temperate terms, but an underlying question remains and I shall press the amendment.

Question put, That the amendment be made:—

The Committee divided: Ayes 4, Noes 7.

Clause 6 - Duty to apply for registration of title

Bill Cash (Conservative, Stone)

I beg to move amendment No. 10, in page 4, line 24, leave out ''must, before'' and insert ''has until''.

Eric Illsley (Labour, Barnsley Central)

With this it will be convenient to take amendment No. 11, in page 4, line 24, after ''registration'', insert ''to''.

Bill Cash (Conservative, Stone)

The Bill imposes a duty to register title to a registrable estate, but that duty seems somewhat toothless, because on the face of it, there appears to be no direct sanction. The Minister is studying his notes carefully as I speak, and I imagine that he has an answer to my point. I regard this as a probing amendment, but I hope that he will come up with such a sanction, because it is an extraordinary state of affairs if that duty is toothless.

The position is the same as at present. If a title that should be registered on the first registration is not registered, the transaction comes to nothing and the buyer who fails to register does not get the title to the property that he would expect to have. The amendments suggest rewording that is consistent with a reasonable approach of encouraging people to undertake the duty, rather than waving a non-existent sword. In practice, if a buyer applies for first registration out of time, the registrar makes an order permitting registration as a matter of course. I am informed that the Law Society, with all its experienced conveyancers on its specialist committee, cannot recall any case in which that has ever caused a difficulty.

Michael Wills (Labour, North Swindon)

As the hon. Gentleman has said, these are essentially drafting amendments and are apparently intended to make clause 6 more accurately reflect the nature of the obligation to apply for first registration. As a matter of drafting, I am unsure whether having until a specified time to do something is different from having to do something before such-and-such a time, which means that the amendment would not achieve its aim.

More importantly, accepting the amendment, which would change the wording established in the Land Registration Act 1997, would send the wrong signals about the Government's commitment to registration and could cause confusion. There should be no doubt about the fact that the Government want more land on the register. Since 1925, the effect of failure to register appears to have been sufficient encouragement to bring about registration. We want more land on the register, and the Bill is designed to bring that about. I see no need for the amendment and I hope that the hon. Gentleman will feel able to withdraw it.

Bill Cash (Conservative, Stone)

In the light of that explanation, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6 ordered to stand part of the Bill.

Clause 7 ordered to stand part of the Bill.

Clause 8 - Liability for making good void transfers etc

Bill Cash (Conservative, Stone)

I beg to move amendment No. 12 in page 5, line 17, at beginning insert—

'(1) Subject to subsection (2),'.

Eric Illsley (Labour, Barnsley Central)

With this we may discuss amendment No. 13 in page 5, line 24, at end insert—

'(2) If the requirement of registration is applied because of section 4(1)(g) and the mortgagee applied for the registration of the estate, or undertook to do so, with or without the consent of the mortgagor, the mortgagee is liable as set out in subsection (1).'.

Bill Cash (Conservative, Stone)

The amendments relate to liability for making good void transfers under clause 8. The amendments' purpose is to provide that where there is the grant of a mortgage with or without a transfer to the mortgagor, and where that leads to compulsory registration, the practice is for the mortgagee to apply for registration because they have the title deeds to protect their security. A late application for registration would be a serious matter for a mortgagor, and it would also be beyond their control.

It seems unlikely that failure to affect first registration would cause difficulty, so we are proposing that the consequences should fall on those who are responsible. When a person buys a property with a mortgage, the mortgagee immediately takes the deeds as security. In practice, it is the mortgagee who must deal with registration, although the responsibility may appear to rest with the mortgagor. If the mortgagee overlooks the matter, they are responsible for any loss.

Michael Wills (Labour, North Swindon)

We agree with the sentiment behind the amendments, and we understand that between the parties it will often be right to apportion liability for the resulting costs. However, we must resist the amendments.

The Bill imposes an obligation on the responsible estate owner to apply for first registration of title within two months of an event that triggers first registration. If the responsible estate owner does not do so, and the registrar does not make an order allowing him extra time, the document transferring title must be repeated, which would result in further costs. The combined effect of the two amendments would be to transfer that liability to the mortgagee in cases where they have the task of submitting the application for registration. The Bill does not prevent that liability being placed elsewhere by agreement; it merely replicates the long-established default position reflected in subsections 8 and 9 of the Land Registration Act 1925, which places the primary responsibility on the person who should be registered as proprietor of the estate.

I should also emphasise a point made in another place: conveyancing practice will change dramatically over the next few years. Even if there were a strong argument for changing the default position, now is not an appropriate time to make that change. That should be left for when we have a clearer picture of what the future holds. I hope therefore that the hon. Gentleman will feel able to withdraw the amendment.

Bill Cash (Conservative, Stone)

In the light of the Minister's explanation, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Bill Cash (Conservative, Stone)

I beg to move amendment No. 14 in page 5, line 24, at end insert—

'( ) For the purposes of section 12A of the Stamp Act 1891 (c. 39), an instrument to which section 7(1) applies shall be treated as having been accidentally spoiled.'.

This is a repetition of an amendment that we proposed in the other place. It is a probing amendment to ensure that if an instrument were voided by failure to apply for registration, the stamp duty paid on it could be used on any replacement instrument executed to give effect to the original transaction. The Bill states that in certain cases, which we agree are rare, a second instrument may be executed to replace the one that was ineffective because registration had not occurred. It seems to me that that is a subject to which it is worth returning. The Minister may be able to reassure me on Report.

Michael Wills (Labour, North Swindon)

I hope that I shall be able rapidly to reassure the hon. Gentleman on this point.

The Stamp Duties Management Act 1891 already ensures that only one payment of stamp duty is made in such situations. Section 9 of the 1891 Act states that subject to the production of evidence as to the facts, and to compliance with stamp duty regulations, allowance is to be made by the commissioners for stamps spoiled

''when an instrument executed by any party thereto becomes void for want of registration within the time required by law.''

I can therefore reassure the hon. Gentleman that the amendment is unnecessary, and I invite him to withdraw it.

Bill Cash (Conservative, Stone)

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 ordered to stand part of the Bill.

Clauses 9 and 10 ordered to stand part of the Bill.

Clause 11 - Freehold estates

Bill Cash (Conservative, Stone)

I beg to move amendment No. 15, in page 7, line 12, at end insert—

', or, as the case may be, the other persons,'.

Eric Illsley (Labour, Barnsley Central)

With this we may discuss amendment No. 16, in clause 12, page 7, line 40, at end insert

', or, as the case may be, the other persons,'.

Bill Cash (Conservative, Stone)

These are probing amendments that are intended to cover cases in which the proprietor has no beneficial interest. Without the amendments, the provision appears to apply only where the proprietor has no beneficial interest. These are purely drafting amendments, and I look forward to the Minister's reply.

Michael Wills (Labour, North Swindon)

I hope that I can rapidly reassure the hon. Gentleman. It may help the Committee if I read the parts of the Bill that deal with those issues. Clause 11 states:

''If the proprietor is not entitled to the estate for his own benefit . . . as between himself and the persons beneficially entitled to the estate, the estate is vested in him subject to such of their interests as he has notice of.''

Clause 12 states:

''If the proprietor is not entitled . . . solely for his own benefit, then, as between himself and the persons beneficially entitled to the estate, the estate is vested in him subject to such of their interests as he has notice of.''

I therefore suggest that the amendments are unnecessary. Clauses 11 and 12 are clearer than section 5(c) of the Land Registration Act 1925, which does not suggest that there are two different situations to consider.

The amendments would add to the length of the clauses without adding to their clarity, and although I understand their probing nature, I hope that the hon. Gentleman will not press them.

Bill Cash (Conservative, Stone)

I am glad that the Minister referred to the defects in the 1925 Act that we discussed on Second Reading. There is no doubt that the Bill is an improvement, and I should like again to record our appreciation of those who have drafted the legislation and those who have helped to improve it in Committee. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Harry Barnes (Labour, North East Derbyshire)

In clause 11 we are dealing with the effects of first registration—the clause addresses freehold estates. On Second Reading, I raised problems with that and perhaps they can be raised again. I recognise, however, that it may only be appropriate to table amendments later. I flag that up now so that the Minister can give it consideration.

I want to raise two types of cases relating to first registration. The first is where physical boundaries do not fit in with deeds and plans. During the previous sitting, the Minister accepted that that often occurs when new estates are built and a first registration is made. The problem is that it may not initially be discovered that physical boundaries—fences, for example—deviate from the deeds and the plan that have been deposited with the Land Registry. Later, the owner may want to build, say, a garage and could discover that he does not have the amount of land that he believed he had. If that problem arises, the courts may judge that the owner purchased what he saw, rather than what had been recorded in the deeds and detailed by the Land Registry. The registry may even be able to provide evidence of the deviation, but the court's judgment could still be that the individual had purchased what he had seen.

Should we not do something to add to the power of the Land Registry, so that that which is recorded in the deeds would emerge through the court system? When most people get their deeds, they think that that is it and that the deeds cannot be overridden by court decisions, but I know of cases where just that has happened. Amendments dealing with that could be tabled to clause 60, which deals with boundaries. If the Minister gives that his attention, he could probably draft a better-worded amendment than I could.

The second problem relating to first registration is cross deeds. Many complexities exist in new estates. For example, the first person to purchase a property may share access to it, such as a pathway, which may not be recorded in later deeds. I accept that if we move towards electronic conveyancing, we may be able to alert the Land Registry, when it records details, that it is in danger of registering cross deeds, but once they are registered legal difficulties may be faced in trying to correct the situation. Perhaps debate on clause 61 will be an appropriate time to discuss that.

Michael Wills (Labour, North Swindon)

I am grateful to my hon. Friend for his remarks. He rightly identified what is often a considerable problem, which the Bill will help to solve. The proposals in part 9 will give someone who has occupied land in good faith a right to apply to be registered. There is a procedure, as he said, to apply to have boundaries fixed. He is also right in thinking that when e-conveyancing is introduced fully it will considerably ease the problem of cross deeds.

Overall, the clause forms the central plank of the Bill's measures to ensure that the register sets out clearly who owns land, with what title and with what powers. It also paves the way for something rather more than clarification and simplification of the existing law. Its central objective is that the register should be as complete and accurate a reflection of the state of title of land at any given time as is reasonably practicable. The clause assists in that aim by providing that a newly registered freehold estate vests in the proprietor, subject only to a severely limited list of interests.

Obviously, the first class of such interests will be those that are the subject of an entry on the register. The second will be when the estate is subject to one of the unregistered interests that override first registration specified in schedule 1, which is one of the reforming parts of the Bill. Clearly, the fewer the interests that can bind someone who acquires an interest in registered land without appearing on the register the better.

It is simply not possible to abolish such interests. With some it would be unreasonable or unreasonably burdensome to expect the person who benefited from them to register—for example, those with short and sometimes completely unwritten leases. With others, it would be practically impossible to require them to be registered—for example, rights to coal and minerals frequently depend on complex analysis of both fact and law before they can be clear.

Interests that do not meet the tests should be removed. Some of the more obscure ones will be phased out after 10 years, although they can be entered on the appropriate register without charge in the interim.

The Bill also contains measures to encourage the registration of interests that do not have to be registered to take effect, and clause 71 imposes an obligation to disclose known unregistered interests so that they can be recorded.

The remaining interests that will bind someone who acquires interest in land are new. They are interests that have been acquired under the Limitation Act 1980 and of which the proprietor has notice. This provision is designed to meet the situation when a squatter has acquired title to the land but is no longer in occupation and the buyer is unaware of the earlier squatting.

The clause and schedule 1 will make a major contribution to simplifying and clarifying the law.

Question put and agreed to.

Clause 11 ordered to stand part of the Bill.

Clauses 12 to 22 ordered to stand part of the Bill.

Clause 23 - Owner's powers

Bill Cash (Conservative, Stone)

I beg to move amendment No. 22, in page 11, line 9, at end insert—

'( ) A charge by way of legal mortgage created by an owner gives the mortgagee the protection, powers and remedies provided by section 87 of the Law of Property Act 1925 (c. 20), despite the fact that an owner does not have power to create a mortgage by demise or sub-demise.'.

Eric Illsley (Labour, Barnsley Central)

With this it will be convenient to take amendment No. 23, in page 11, line 19, leave out paragraph (c).

Bill Cash (Conservative, Stone)

The Bill removes the power to create a mortgage by demise. That is a helpful and welcome modernisation, assuming that the man in the street knows what a mortgage by demise means. As a solicitor who has held a certificate to practise since 1967, I am well aware of the complexities of the law. However, although I have done quite a lot of conveyancing, it is not one of my specialties. Despite the Government's intention to improve the quality of the legislation, which I appreciate, it is obvious as we proceed that we are dealing with matters of enormous complexity and that much of the language is, by definition, more than the average person can be expected to understand. Speaking as a lawyer, I am happy to acknowledge—I can see St. Thomas's hospital across the river—that the same applies in the medical and other professions.

Complications develop by accretion and we must simplify the legislation and the language that is used. It is quite a bold task, but Justinian managed to do it in the 3rd or 4th century, if I have my dates right—I probably have not. He went off to Byzantium, took one look at the statute book and saw that it was an incredible mess, employed 2,000 lawyers and told them that they had about 18 months in which to sort it all out. Believe it or not, they achieved that.

My point is an example of the question marks that arise in drafting. How does one define what a legal charge is when what it is said to be equivalent to can no longer be created? The purpose of the amendment is to overcome that. The matter was first raised in the House of Lords and there is an intellectual battle between the draftsmen. We believe that our amendment is preferable because it resolves the problem more directly and simply, and that the Government's formulation in the Bill is unnecessarily complicated and might even be technically defective. The difficulty that I am predicating comes not from the change to section 87 of the Law of Property Act 1925 made by clause 23 (1)(a), which is the basis on which the Government's formulation proceeds. Clause 23 does not affect the meaning of section 87 of the 1925 Act but provides that a registered proprietor cannot make a disposition of a kind to which section 87 refers. I am happy to acknowledge that those words, which may sound erudite, have their basis in the intellectual battle between the draftsmen on both sides of the equation. I want to put the issue on the record because drafting amendments can ultimately become a matter of contention in the courts. I look forward to hearing the Minister's response.

Michael Wills (Labour, North Swindon)

I am sure that the hon. Gentleman will join me in recognising the fantastic achievement of the Bill team and those in the Land Registry and the Law Commission, who are fewer in number than Justinian's 2,000 lawyers but have achieved something almost as remarkable, which will go down in history for almost as long as Justinian's great reforms.

Amendment No. 22 is a response to concern about the fact that the Bill prohibits the use of charges by demise or sub-demise by an owner of a registered estate. It is by reference to such charges that the powers are described. The Government share that concern, and the Bill was amended by a Government amendment in another place. It adds a further subsection to section 87 of the Law of Property Act 1925, confirming that there is no intention to alter the effect of section 87(1) through the Bill's provisions. There was some debate about whether that was the best way to achieve the desired result, but no doubt was cast on the amendment's effect. There seems little remaining need for concern, therefore, and I hope that the hon. Gentleman can see his way clear to withdrawing the amendment.

One of the Bill's aims is to simplify the law, and it achieves that incrementally in many of its provisions. For instance, once it is enacted it will no longer be possible for an owner of a registered estate in land to create a mortgage by demise or sub-demise. Instead, the Bill permits the use of only simple methods for an owner of a registered estate in land to create charges over registered land. In that vein, the Bill also requires that the owner of the charge use only one of the existing methods to charge his interest with the payment of money.

Amendment No. 23 would restore an alternative method by creating a sub-charge, even though the rights and remedies of the person with the sub-charge are not affected in any way by the manner in which that sub-charge is created. That constitutes an unnecessary complexity, and it is far easier to have a single, widely accepted and easy method of achieving the required legal effect. I therefore ask the hon. Gentleman not to press the amendment and to resist the temptation to introduce complexity for complexity's sake, thereby undermining one aim—an aim that he shares—of this well-drafted legislation.

Bill Cash (Conservative, Stone)

On the principle of ne nos inducas in tentationem, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 23 ordered to stand part of the Bill.

Clause 24 ordered to stand part of the Bill.

Clause 25 - Mode of exercise

Bill Cash (Conservative, Stone)

I beg to move amendment No. 24, in page 11, line 27, leave out 'and content'.

Eric Illsley (Labour, Barnsley Central)

With this it will be convenient to take amendment No. 76, in schedule 10, page 66, line 35, leave out 'and content'.

Bill Cash (Conservative, Stone)

The object of the amendment, which relates to proceedings in the other place, through which we appear not to have made the desired impression on the contenders on this battleground, is that the content of registrable dispositions should be determined not by rules but by the particular terms of individual transactions. Although the Land Registry wishes to control the form of documents submitted to it to ensure that they can be admitted to the register in the most efficient way, there seems absolutely no reason why the content should be prescribed by general rules, given that such content varies widely depending on the individual terms of each transaction. I hope that the Minister will also take account of the important point that freedom of contract makes the United Kingdom an attractive place to do business. In that regard, there should be no unnecessary constraints, and I should be interested to hear his comments on those points.

Michael Wills (Labour, North Swindon)

Both amendments would reduce the scope of the Bill's rule-making powers. In recent years, the Land Registry has altered its requirements in respect of the forms of disposition used for registered land. Those forms now have an easily recognisable appearance and must contain certain information about the transaction in designated places. Although it has taken time for internal staff and external customers to get used to the forms, I understand that they are generally regarded as much easier to navigate and to extract key information from. However, the requirements have to stipulate certain essential details that the document must contain for the legal attention to be achieved. Otherwise, they would allow the parties to agree their own additional terms and conditions, provided that they are located in the appropriate place.

It is difficult to imagine the exact form that documents used in the electronic conveyancing system will take. That form will be novel, but the rules introducing the documents will be constructed after wide consultation, and after scrutiny in the Rule Committee. The rules must inevitably provide for formally structured information containing at least certain basic and essential details. There is no present or future intention to restrict the parties' ability to agree their own terms. Rather, the aim is to make the extraction of information about those terms—whether by human beings or by an automated land registration system—as easy as possible. It seems more likely that, in the electronic world, the content rather than the form of the documentation will be controlled. In the light of the reassurance given in another place, that by ''content'' the Bill means the generic context rather than specific details, I hope that the hon. Gentleman feels able to withdraw the amendment.

I turn now to amendment No. 76. Schedule 10(3), which fulfils an important function in the conveyancing process, relates to implied covenants. An obligation to deduce title to land in accordance with a contract of sale comes to an end on completion of the sale. Establishing that a breach of implied covenants for title has occurred is the only way in which a transferee can seek a remedy for defects in title that emerge after completion. Rule 77A(2) of the Land Registration Rules 1925 currently provides that a person will not be liable for a breach of most implied covenants in respect of matters set out in the register of title. The Bill addresses that issue by inserting a new subsection in section 6 of the Law of Property (Miscellaneous Provisions) Act 1994. That insertion does not replicate existing law exactly, but the differences are not material and the law is made clearer, more coherent and accessible as a result.

The rule-making powers in schedule 10 are fairly limited in scope, but they are nevertheless important. They are designed purely to ensure that everybody knows when implied covenants have been given in relation to a transaction, and whether the statutory form of covenant has been modified in any way. There is no intention, as the hon. Member for Stone may fear, to tinker with the precise wording of implied covenants, which has been developed and refined over centuries. In the light of that reassurance, I hope that he feels able to withdraw the amendment.

Bill Cash (Conservative, Stone)

No doubt the Minister has observed that pressing an amendment to a Division tends to be accompanied by certain movement from another Committee Room. I have as many troops at my disposal as I am able to muster, and I am extremely grateful to them for turning up yet again.

I am afraid to say that I do not regard the Minister's response as sufficient. He looks suitably shocked, but we regard this matter as important. I mentioned that freedom of contract makes the United Kingdom an attractive place to do business, and although time will tell, we regard the provision as an unnecessary constraint. The Opposition must form judgments on such questions. The Minister nods his head sagely and I am grateful to him for that, but we still intend to press the amendment to a vote.

Question put, That the amendment be made:—

The Committee divided: Ayes 3, Noes 8.

Clause 26 - Protection of disponees

Bill Cash (Conservative, Stone)

I beg to move amendment No. 25, in page 12, line 11, leave out ''seven'' and insert ''fourteen''.

Although it may be the objective to reflect limitations of owners' powers on the register, if a qualification is omitted from the register by mistake, it must be against public policy to legitimise dispositions that legislation has made void. There are restrictions on dispositions by local authorities and by charities. Subsection (3) appears to mean that someone could otherwise acquire a good title. The Bill seeks to protect people who take a transfer of registered land when it is apparently valid on the face of the register. While that is certainly useful, it must be against policy that it should overrule statutory restrictions imposed on particular landowners.

The register would normally reflect such restrictions, but in practice one has to deal with the cases in which that safeguard falls down. Restrictions are placed on certain disposals by charities, local authorities and registered social landlords. In those cases, we believe that it is extremely important that human error may be allowed for. In a nutshell, it is our view that is simply wrong to write off a qualification of an owner's powers on the register in the event that the registrar makes a mistake.

Michael Wills (Labour, North Swindon)

I am afraid that again I must resist this amendment. One of the overriding principles on which confidence in the land register is currently based is that the register is conclusive about an owner's powers. This contributes substantially to the ease with which the conveyancing process operates and benefits the economy as a whole. This will become even more important as the fundamental objective of the Bill is achieved. It must be possible to investigate title to land online, with the absolute minimum additional inquiries and inspections. Any limitations on the power of the owner to deal with the land or a charge must be the subject either of entries on the register or of limitations imposed by the Bill itself. That should be the case whether those limitations arise by agreement with third parties or by the imposition of statute.

If this amendment were made, however, people dealing with any title would need to consider what statutes might impose a limitation on the owner's powers, and then investigate to see if that is the case. That would in turn detract from the completeness and clarity of the register of title in a way that we find unacceptable. That is why the Government prefer the simplification of the existing law effected by the Bill.

Under the Bill, any limitation on the owner's powers can be recorded by restriction. This is often done in practice by the Registry automatically where it is apparent that statutory limitations apply. The purpose of these provisions is simply to protect the buyer of the land. They reflect the current law, we believe that they strike the right balance between the competing interests that can arise in such situations. They do not prevent the selling owner from being held to account for exceeding his or her authority, nor do they prevent an interested party from applying for a restriction to be entered as a precautionary measure. I hope that that explanation provides some comfort to the hon. Gentleman and that he can now withdraw the amendment.

Bill Cash (Conservative, Stone)

In the light of what the Minister said, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 26 ordered to stand part of the Bill.

Bill Cash (Conservative, Stone)

On a point of order, Mr. Illsley. I have decided not to move amendment No. 29. For reasons related to what I said earlier, I do not intend to move any amendments to clauses until at least, at present reckoning, clause 55, and I may not do so to even later clauses. I therefore seek your guidance on a technicality, which I accept that you may not be able to avoid. Rather than repeat whether a clause is to be debated each time, I could tell you in advance that I do not intend to resist or move amendments to those clauses and we could deal with them in one fell swoop, thus making dramatic progress.

Eric Illsley (Labour, Barnsley Central)

I have taken advice on the point raised by the hon. Member for Stone, and—unfortunately for me—I am required to put the Question on every clause in the event that an hon. Member wants to speak in a clause stand part debate. I must therefore continue, but I am grateful to the hon. Gentleman for his suggestion.

The Chairman proceeded to put the Questions on clauses.

Clauses 27 to 59 ordered to stand part of the Bill.

Clause 60 - Boundaries

Bill Cash (Conservative, Stone)

I beg to move amendment No. 52, in page 22, line 7, leave out ''may'' and insert ''shall''.

Congratulations, Mr. Illsley, on that marathon run. I am amazed that you managed to remember the words as well as you did. It is a bit like reciting ''The Rime of the Ancient Mariner''. I hope that the Clerks and others and the Minister will take note of the point that I have tried to make: in the absence of any sense of dissension in a Committee of this kind, having to go through such a marathon to no useful purpose seems an unbelievable waste of time and breath. That is all part of my continuing interest in improving the procedures of the House and its Committees. Wearing my hat as shadow Attorney-General, I am entitled to make that point. I am sure that the Minister will agree, and that my point will be noted down and referred to the appropriate sources, such as the Leader of the House.

The amendment concerns rules for fixing boundaries. Those are well established, but little used. There should be no doubt that that facility will continue. The overwhelming majority of property boundaries shown on Land Registry plans are subject to the general boundaries rule—in other words, they are approximate. That flexibility is valuable. At least one state in the United States abandoned registration of title early in the 20th century because fixing precise boundaries was found to be impractical.

Remembering any of the great films with John Wayne and the others that we can all recall from the '50s and '60s—at least, those of us who were around at the time can—I would think that it was extremely difficult in the United States to establish where boundaries were. It seems that they kept on being pulled down and re-erected, and an awful lot of people got shot in the intervening period. We are rather more peaceable about such matters over here, although I suspect that there are some people not very far from here who have grave reservations about the system.

The procedure for fixing boundaries—that is, guaranteeing what is shown on Land Registry plans—is well established and sometimes very useful. It is therefore important that it remain. The Law Society proposes that there should be a duty to make rules for that purpose rather than it being discretionary. The Land Registry quinquennial report says that fixed boundaries may become more common, especially where adverse possession proceedings succeed in boundary cases.

Michael Wills (Labour, North Swindon)

This is an important subject. As my hon. Friend the Member for North-East Derbyshire has already inferred, it often causes considerable concern. I hope that my remarks will reassure him as well as the hon. Member for Stone.

Powers in clause 60 allow rules to be made governing the determination of a fixed boundary. It might be helpful if I remind the Committee that the boundaries marked on registry plans are general ones, mapped to obvious landmarks. They are not precisely determined and an application to the registrar is necessary for a definitive answer to be given on where the boundaries lie between two properties.

The procedure is used comparatively infrequently and inevitably requires an application to the registrar and the work that that involves. Applications are often opposed and the general feeling may be that there is no need to invoke the procedure unless there is a specific problem to be dealt with. The report behind the Bill states that that may well change, since improved computer-based mapping techniques may enable a rather cheaper firm boundary to be constructed.

Effective provision by rule is already essential and will remain so, but that is not an argument for the amendment. The style of drafting adopted throughout the Bill and the general practice for conferring power to make rules are designed to make it possible for rules to cover certain items, but not to require them to be made for any specific purpose. It is the correct approach to give the Lord Chancellor maximum flexibility to adapt the rules as the registry embarks on major changes to electronic conveyancing. Rules covering that area and other elements of land registration will be approved by the Rule Committee and will, following a Government amendment, be subject to the negative resolution procedure. There will be much scrutiny of what they contain, and gaps can be pointed out during that process.

A technical, if rather cautious, point against the amendment is that stipulating what the rules must contain would raise the argument that the condition had not been met, and raise the question of validity if the pre-condition had not been met. That would be highly undesirable and unnecessary in the context of the clause, given the degree of scrutiny that the rules will receive. I reassure the hon. Member for Stone that the intention is to make rules that deal with all of the headings set out in the clause. However, we should not place an artificial limitation on the registry's ability to adapt its procedures in appropriate ways that we cannot yet envisage. In light of that reassurance, I hope that the hon. Gentleman will withdraw the amendment.

Mr. Barnes rose—

Bill Cash (Conservative, Stone)

I await with interest and bated breath the comments of the hon. Member for North-East Derbyshire. I know that he has concern about the clause, which he raised on Second Reading. I will reserve stating my position until after we have heard his comments.

Harry Barnes (Labour, North East Derbyshire)

I have been rather caught out by our fast-moving proceedings. When I spoke in the debate on clause 11, I said that I would like to persuade the Minister to table appropriate amendments to clause 60, or that I might be minded to do so myself—there was still time then to table an amendment for today. I am in difficulty because I did not realise that I was a member of this Committee until yesterday and by then it was too late to table an unstarred amendment. That is why I said that I wanted the clause to be clarified.

The Minister said that there is scope for the Land Registry to provide clarification when a dispute arises about the exact position of a border. However, in some cases, people have purchased property around which there is a clear physical border and no dispute is apparent, only later to discover that the border does not tie in with the deeds. The boundary line in the plan may not be particularly precise or accurate, but there are cases when part of a property has not been included and it is clear that the area goes beyond the boundary. Sometimes, such disputes are not taken to the Land Registry, but are dealt with by the courts, although the registry may adopt a position that defends the owner.

I have a constituency case of that nature and the people involved feel aggrieved. I support their position. New land that was being marked out was owned by the builder who was building the house next door, which he was occupying even though it took over a portion of land that was clearly included in the deeds. Because the courts had ruled that the people had purchased what they saw rather than what was in the deeds, they were placed in an extremely difficult position, which has led to an on-going dispute. Under the law as it stands, they have lost the very element of land that was initially in their deeds, and they believe that the deeds should have had much greater standing. Although the case could be taken to court again on appeal, financial and other difficulties would arise.

Sitting suspended.

On resuming—

Bill Cash (Conservative, Stone)

I have nothing to add to what I have already said. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 60 ordered to stand part of the Bill.

Clause 61 ordered to stand part of the Bill.

Harry Barnes (Labour, North East Derbyshire)

On a point of order, Mr. Illsley. I thank members of the Committee for agreeing to that suspension, which was granted to try to accommodate my concerns. I was not able to table an amendment, but it is helpful to have discussed the matter, and I hope to proceed by other methods.

Eric Illsley (Labour, Barnsley Central)

Is it the Committee's wish that I invoke Standing Order No. 52 whereby, with the possibility that there will be no more Divisions, I put the question that a group of clauses stand part of the Bill?

Bill Cash (Conservative, Stone)

On a point of order, Mr. Illsley. I was surprised that amendment No. 63 was not selected, as I had something to say about it. I am sure that there is a reason, but I should like to know what it is.

Eric Illsley (Labour, Barnsley Central)

I am advised that the amendment was not selected because it was defective.

Bill Cash (Conservative, Stone)

I am sorry to hear that. I was not aware of it—nor were those advising me. However, that is your decision, Mr. Illsley, and I shall have to take note of it.

Eric Illsley (Labour, Barnsley Central)

Yes, because that is the sum total of information that I have about the amendment. I shall try to get further clarification in due course.

Clauses 62 to 65 ordered to stand part of the Bill.

Clause 66 - Inspection of the registers etc

Bill Cash (Conservative, Stone)

I beg to move amendment No. 55, in page 24, line 5, after 'document', insert 'other than a lease or charge'.

Eric Illsley (Labour, Barnsley Central)

With this it will be convenient to take amendment No. 56, in clause 67, page 24, line 17, after 'document', insert 'other than a lease or charge'.

Bill Cash (Conservative, Stone)

The object of the amendment is to restrict the availability of information that individuals may consider private or that companies may consider commercially confidential. Land Registry records have only been open to general inspection for less than 20 years. At the time that the change removing confidentiality was made, an undertaking was given to safeguard the privacy of people's private and commercial information by not disclosing the contents of leases and charges. There is good reason for that. However, I regret to say that the Government propose to remove those safeguards and to allow access to leases and mortgages, both residential and commercial.

I expect the Minister to say that rules in this matter follow the policy that underlies the Freedom of Information Act 2000. The presumption is to supply a copy of the information unless it falls within the exceptions of commercial confidentiality and data protection. Will the Minister explain how a determination will be made to establish whether documents fall into that category? Will certification by a solicitor that the document is commercially confidential be sufficient, or does the Land Registry intend to make its own determination? It is understood that these matters will be discussed when the rules are discussed, but we would like some indication of the Government's thinking at this stage.

Michael Wills (Labour, North Swindon)

I agree with the hon. Member for Stone that the clause is important. It provides that, subject to any exceptions and provisions specified in the rules, anyone may inspect and make copies of the register of title together with any other documents either referred to in the register or kept in relation to an application affecting that register.

As the hon. Gentleman divined, the rules made under the clause will reflect the principles underlying the Freedom of Information Act 2000. Leases and charges will not be excluded automatically from the list of documents to which the public have a right of access, as they are under existing legislation. The presumption in the 2000 Act is that information will be supplied unless there is good reason for it to be withheld. There are two bases on which the register of information might be withheld under the exceptions stated in that Act. Following application of the Data Protection Act 1998, information may also be withheld on the grounds of personal or commercial sensitivity.

Land registration rules will clarify how the principles will be applied, but if leases were excluded as a class, better information on leases—our consultations show clearly that that is what businesses want—would be difficult or impossible to assemble. However, I assure the hon. Gentleman that rules are likely to provide for persons submitting documents to assert confidentiality in case of objection and an independent adjudicator or a court will decide between them. I hope that that will give him some comfort.

The amendments seek to reproduce the current position when leases and charges are automatically and permanently excluded, and that would not only be damaging to the greater transparency of the markets, but offend the principles on which the Freedom of Information Act 2000 is based.

The consultant who carried out the quinquennial review of the Land Registry's work reported that there was particular enthusiasm among users at the prospect of wider information on leasehold property shedding light on commercial property transactions and so creating a better and more competitive market.

The details of what will be released and what will be withheld will be subject to land registration rules. I remind the Committee that those rules will be subject to the scrutiny of the Rule Committee and Parliament. They will also be subject to widespread consultation with all those involved in conveyancing. That will ensure that the rules provide for the exclusion of appropriate documents, including leases and charges, from the public gaze in the way envisaged by the Freedom of Information Act. They may usefully describe how the Registry will identify documents as of a commercially sensitive nature.

I hope that those assurances will be adequate and that the hon. Gentleman will feel able to withdraw the amendment.

Bill Cash (Conservative, Stone)

In the light of what the Minister said and bearing in mind the importance of the subject, which he acknowledges, and the degree of consultation that he has explained—I have no doubt that the matter will be returned to in consultation and in relation to whatever the Rule Committee proposes—I am prepared to withdraw the amendment.

Bearing in mind that the time is now 12.58 pm, you may find it convenient, Mr. Illsley, with the agreement of the Committee, to put the Questions on clauses 67 to 70 so that when we return this afternoon—

Michael Wills (Labour, North Swindon)

On Thursday.

Bill Cash (Conservative, Stone)

There is all the more reason for doing so—if that is convenient.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 66 ordered to stand part of the Bill.

Clauses 67 to 70 ordered to stand part of the Bill.

Eric Illsley (Labour, Barnsley Central)

For the information of the Committee, we are not sitting this afternoon but will sit on Thursday morning.

For the benefit of the hon. Member for Stone, the defect in amendment No. 53 is the word ''two'' in the last line. Parliamentary counsel could not determine whether that word applied to schedule 6 or clause 62, which is the subject of the amendment.

It being One o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till Thursday 13 December at half-past Nine o'clock. {**vert_rule**}