Land Registry: a sell-off too far?

Privatisation of Land Registry would mark a significant change to the status of a vital piece of our national infrastructure. It is an important public service registering the ownership of property and interests in land. It is central to the property market and also one of the largest property databases in Europe.

The Registry is what economists call a ‘natural monopoly’ – like the tax system. If you put a natural monopoly into the private sector and give it the remit to both provide the state function – registration services – but also commercial functions such as the exploitation of data, then potential conflicts are created.

But it is much more than a database. It plays an active role in determining interests in land. Currently, civil servants rather than private sector employees make partially judicial determinations when recording interests in, and rights over, land.

If non-civil servants were to make these decisions in a profit-driven entity it might affect service and quality. It is a matter of concern that the government would prioritise the short-term need to reduce the deficit over the independence, integrity and quality service that the 154-year-old Registry provides.

Decisions about the register should hinge solely on the long-term ramifications that any changes would have.

That the government is planning to sell off functions of the Registry to pay towards reducing the deficit is in stark contrast to the Registry’s financial independence from government. It receives no government funding. It finances itself from registration and search fees and even provides annual payments to government.

Security of the register is in the national interest and underpins the UK property market. It holds a huge amount of data and as such may be the target of cyber-criminals.

Even if the proposals contained guarantees about the security of the register it is hard to imagine this could be maintained to the current level. What is the penalty if these guarantees are not met? What would a sufficient penalty for major data breaches look like?

Although the government proposes to retain ownership of the registers, selling off the rest of the Registry’s operations to the private sector could create conflicts of interest and raise competition issues. It is difficult to conceive how competing registers of property ownership and interests would operate.

If the privatised Registry provides data products to the market it will have a competitive advantage because it will be the primary venue from which to buy such material, but also because it will have first access to the monopoly data. This would enable it to develop new products, where it may not have supplied the data on which they were based to the whole market. This also applies to the publicly owned Registry, but it operates within proper controls and would be unlikely to exploit the data in the same way.

However, the government intends to privatise the Land Registry and as such the Law Society has called for maintenance of the existing state guarantee without compromise, maintenance of the system of indemnity and many other safeguards. It is imperative that these are contained not only within the contract or regulatory licence framework, but also within primary legislation.

We are calling for safeguards to address several issues, including competition and conflicts of interest; security; corruption and fraud; data protection; freedom of information legislation; and contingency plans to ensure continuity of service if the private company fails. There also need to be accessible and cost-effective systems for redress.

We understand that the Registry would benefit from inward investment to enable digitisation to happen more quickly. These benefits however need to be measured against the potential risks of privatisation. Without  solid assurances that safeguards will be in place the Land Registry should remain in public ownership.

Jonathan Smithers is president of the Law Society