The advent of prescribed clauses leases should help the Land Registry in processing applications more efficiently, explains David Rees

As a result of the Land Registration (Amendment)(No 2) Rules 2005, SI No 2005/1982, next year will see the introduction of prescribed clauses leases (PCLs) for most new leases, both residential and commercial, which are registrable under the Land Registration Act 2002. This will have an important effect on how new leases are prepared. Practitioners will need to be fully familiar with the requirements.


A consultation paper was issued to practitioners and others last year, and important changes have been made in the light of responses received.


A PCL is a lease that is required by the 2005 rules to contain the 'prescribed clauses', being a set of standard clauses to be set out at the front of the lease, and containing various details relevant for registration purposes. The clauses do not represent a 'precedent lease' and practitioners can still use their existing precedents or any other form of lease they wish, provided it contains the prescribed clauses.


It is hoped that the use of PCLs will assist both the Land Registry - in processing applications more efficiently - and practitioners in ensuring the lease contains the information needed for registration. It will also be a further step towards e-conveyancing.


PCLs may also help to make leases more user-friendly for clients and others, as the prescribed clauses will be a useful guide (albeit not a complete index or summary) to the contents of a lease for registration and other purposes.


What leases are affected? In general, any lease granted out of a registered estate in land that is required to be completed by registration under section 27(2)(b) of the Land Registration Act 2002 will need to be a PCL. Most importantly, this will include a lease of land granted out of a registered title for a term exceeding seven years.


There are certain exceptions, including the grant of a lease in a form expressly required by an agreement, licence to assign or consent dated before 19 June 2006, or by an order of the court, or by any enactment. Another exception is a deed of variation that takes effect as a surrender and re-grant.


A lease granted out of unregistered land that triggers compulsory first registration of the lease will not need to be in the form of a PCL, but the use of the prescribed clauses within such a lease will be encouraged.


The use of PCLs will be introduced in two stages next year. When the relevant provisions of the 2005 rules come into force on 9 January 2006, there will be a 'voluntary' period from 9 January to 16 June, during which applications may be made to register leases containing the prescribed clauses, even though their use is not yet compulsory.


During this period, the Land Registry will complete registration as if the lease did not contain the prescribed clauses (except that an application to register a standard restriction may be made in clause LR13). Even so, it will check the clauses and provide feedback about those that would have contained errors had the registration been completed using the information set out in them.


After the end of this voluntary period, the use of PCLs will become compulsory. Any lease dated on or after 19 June 2006 that is required to be in the form of a PCL must contain the prescribed clauses and the registration will be completed using the information set out in those clauses.


What are the prescribed clauses? There are 14 prescribed clauses. In the interests of standardisation, no prescribed clause should be omitted from a PCL (even where it is not relevant to the lease), except that clauses LR13 and/or LR14 may be omitted if they do not apply. Briefly, the individual clauses are:


  • LR1. Date of lease.


  • LR2. Title number(s) - namely, the landlord's title number(s) and any other title number(s) against which the Land Registry is being requested to make entries.


  • LR3. Parties to the lease.


  • LR4. Property (this should contain either a full description of the property leased or a cross- reference to the relevant section of the lease).


  • LR5. Prescribed statements (for example, any prescribed statements for a charity or the grant of a lease under the Housing Acts of 1985, 1988 or 1996).


  • LR6. Term for which the property is leased.


  • LR7. Premium.


  • LR8. Prohibitions or restrictions on disposing of the lease.


  • LR9. Rights of acquisition (for example, contractual rights of the tenant to renew the lease).


  • LR10. Restrictive covenants given in the lease by the landlord in respect of land other than the property.


  • LR11. Easements (namely, easements granted and/or reserved by the lease).


  • LR12. Estate rent charge burdening the property.


  • LR13. Application for standard form of restriction (this clause may be used to apply for one or more standard forms of restriction to be entered against the leasehold title and/or any other title number. Form RX1 does not then need to be lodged).


  • LR14. Declaration of trust where there is more than one person comprising the tenant.



    • It is important that the prescribed clauses are completed accurately, to ensure the registration reflects the terms of the lease. For example:


    If there is a conflict between clause LR4 and the remainder of the lease, then for the purposes of registration this clause will prevail and the registration will be completed solely on the basis of the description in clause LR4.


    If clause LR2.2 is not correctly completed with details of the relevant title number(s), the Land Registry is not obliged to make any entry in respect of any matters referred to in clauses LR9, LR10, LR11 and LR13 against the title(s) concerned, unless separate application is made on Form AP1, AN1, UN1 or RX1 (as appropriate).


    If clauses LR8, LR9, LR10, LR11 or LR12 are not completed correctly, the Land Registry is not obliged to make any entry in respect of any matters referred to in those clauses, unless separate application is made on form AP1, AN1 or UN1 (as appropriate).


    In the case of easements, if the Land Registry does not make any entry in respect of easements referred to in clause LR11 because the relevant prescribed clauses have not been correctly completed, and no separate application has been made (as above), the easements will not take effect at law as legal easements.


    In the case of interests referred to in clauses LR8, LR9, LR10 or LR12, if the Land Registry does not make any entry in respect of them because the relevant prescribed clauses have not been correctly completed and no separate application has been made (as above), the priority of those interests will not have been protected on the register for the purposes of section 29 of the Land Registration Act 2002.


    In the case of a standard restriction, if clause LR13 has not been correctly completed and no separate application has been made (as above), the restriction will not be entered on the register.


    For additional information, contact the Land Registry dedicated helpline between 8.30am and 5pm, Monday to Friday, tel: 0870 908 8062. Land Registry interactive training materials are available at www.landregistry.gov.uk/education. Land Registry training packs will be issued to credit-account holders. A report on the consultation is available at www.landregistry.gov.uk/assets/library/documents/prescribed_clauses_state0805.pdf.


    David Rees is an assistant land registrar at the Telford office of the Land Registry