Julie Jenkins assesses Land Registry proposals to change the way details are presented in lease applications


The Land Registry's consultation paper on Presentation of prescribed information in registrable leases seeks comments and views on two alternative proposals: firstly, the use of a new form L1 front sheet, and secondly, the use of prescribed clauses that contain the same information but in a different format.



The overriding principle is that whatever information is contained in either the form L1 or the prescribed clauses, that information takes precedence over the remaining provisions in the lease. This is essential to ensure that the application can be effectively processed at the registry without reviewing the remaining parts of the document, and accordingly particular care will be needed in drafting.


The registry previously consulted on the use of a standard lease form, L1, and a standard variation of a lease form, VL1, in August 2002, as part of the consultation on the rules to support the Land Registration Act 2002.


Responses to that consultation raised concerns over the proposed implementation of a full standard form lease and as a result both forms were withdrawn. Consultees said the Land Registry should not seek to prescribe the entire format of a registrable lease, when only certain matters needed recording on the register.


After further deliberations, a new consultation paper was published concerned with providing information in leases. There is currently no intention to pursue a standard deed of variation.



The consultation was launched on 17 September 2004 and already responses have been received, with the consultation generating much interest within the legal profession. To obtain a copy, download the consultation paper from the Land Registry's Web site at: www.landregistry.gov.uk, or telephone 020 7917 8888 (ext 4412 or 4405). The closing date for responses is 10 December 2004.



Leasehold applications



Lease applications to the Land Registry are increasing. Historically, the registry has received more than 200,000 annual applications to register leases. This figure is increasing as a result of the requirement for compulsory registration of any leasehold interest that at the time of its 'transfer, grant or creation' has more than seven years to run.


The 2002 Act also gives the Lord Chancellor power to require leases with terms in excess of three years to be compulsorily registrable, which is likely to be exercised at some future date.


With the prospect of more leasehold applications and leases being available on the open register, standardisation of information will become an important aid to interpretation. It will also be a further step towards e-conveyancing and the development of a more transparent property market.


What leases would be affected? Under section 25(1) of the 2002 Act, the registry has a general power to prescribe by rules the form and content of a registrable disposition. The new consultation document makes frequent reference to 'registrable leases'. Registrable lease means a lease of corporeal land that is required to be completed by registration (usually, a lease for more than seven years), out of a registered estate in land or following an event that has triggered first registration (for example, a conveyance on sale of unregistered land followed by a lease by the purchaser for ten years).


The proposed L1 is unlike any other Land Registry form because it is neither an application form (practitioners will still need to use form AP1 when submitting applications), nor is it a form of disposition (such as a transfer or assent). Its unique characteristic is that it is a form that must be attached to and is an integral part of any registrable lease.


This is effectively a half-way house, allowing the registry to obtain all the information it needs within a set format, but still allowing flexibility within the remaining provisions of the lease. The L1 and the freely drafted lease document, attached to it, together comprise the lease. A draft of the new form L1 is set out in the consultation paper.


The second proposal relates to prescribed clauses. These are also designed to be included at the beginning of a registrable lease. Instead of using a standard form, new land registration rules will prescribe the text but not the way in which that text is presented to the registry. This will allow for full integration within the lease document.


To show how the prescribed clauses might work in practice, the consultation document includes two skeleton draft leases. The sample residential lease illustrates how the clauses might be used in a newly drafted lease and the sample commercial lease how the clauses can be incorporated within an already drafted lease. The clauses could be used where, for example, an existing development already has a complex lease, without interfering with the format or numbering. When an application to register a lease is made to the Land Registry the following information must be included:


- A description of the property;

- Details of the lease (that is, date, term, rent and parties);

- Details of any options contained in the lease (if they need registration);

- The price paid on purchase of the leasehold interest;

- Any matters that affect the landlord's title;

- Rent charges; and

- Charges.


The Land Registry will also look for other information in the lease (for example, whether there is a restriction on disposing of the property, or whether the landlord's title is registered), as this information will also result in an entry being made in the register.


The consultation paper also suggests that there is an option to include additional information relating to:


- Rent (other than the initial rent);

- Service charges;

- Repairing requirements/provisions;

- Permitted use of the property; and

- Restrictive covenants affecting the property.


This information would be particularly useful to surveyors.


The consultation document includes two sets of draft rules that cover the alternative proposals. If the proposals are implemented, further rules will state that a leasehold application will be deemed to include an application to make, where appropriate, entries on superior titles. For example, if an option to purchase the reversion were revealed, then the application to register the lease would also be treated as an application to enter notice of the option in the landlord's registered title.



Covenants and easements



If a leasehold application includes a standard form restriction pursuant to schedule 4 of the Land Registration Rules 2003, a form RX1 must be completed.


If either of the proposals are implemented, solicitors would be able to apply for a standard restriction within the lease itself, although the fee would still be payable. Similar provisions are intended for the noting of restrictive covenants or easements in all the landlord's affected titles.


It is usual practice for leases to contain front sheets that assist the practitioner in understanding the principal terms. The proposals expand on this practice in a way in which the Land Registry maintains will not only benefit practitioners but also landlords, tenants, land surveyors and registry in identifying the key lease terms.



Julie Jenkins is the land registrar at the Land Registry's Gloucester office