Recently issued guidance from HM Land Registry (HMLR) indicates that delays continue to impact upon application timeframes. Whereas applications previously took a matter of weeks to complete, many now take months, if not years. This so-called ‘registration gap’ can lead to complications and unwanted ramifications for applications, and may create difficulties for the law firms involved.
What’s happening at the Land Registry?
According to the most up-to-date guidance on processing data (opens a new window), HMLR continues to suffer lengthy delays in processing applications.
The precise extent of these delays varies depending on the type of application. In the case of register updates – including registering property transfers, updating charges against a property, and changing names on a property – just under 30% of all applications are automated, and are completed within a matter of minutes. However, another 30% take up to a month, and more than 30% take even longer.
But as the complexity of applications increases, so do the processing times. More complex changes and new entries include multi-title applications submitted by developers, or major infrastructure projects. Registering properties for the first time, dividing existing titles, or lodging a new lease also fall under this category.
For these more complex applications, just 9.9% are completed within one month, under a quarter are completed within six months, and less than half are completed within a 12 months. 55.7% of all such applications take longer than a year to complete.
What’s causing the delays?
A combination of several factors is leading to the current delays within HMLR. Legacy impacts of the COVID-19 pandemic are one factor, with much of the current backlog having been established during the forced transition to remote and hybrid forms of working.
In parallel, the introduction of a stamp duty holiday in July 2020 brought increased stimulus to the housing market during the pandemic. The holiday – which exempted from tax the value of a property below £500,000 – saw transactions in the year to June 2021 increase by 19% (opens a new window). Much of this was driven by growth in higher-value properties, where potential savings were as much as £15,000. The holiday ran until September 2021.
In its effort to combat this backlog, errors on applications represent the primary stumbling block facing HMLR. In the case of more complex applications, between 55% and 65% of applications require clarification or further information – known as ‘requisitions’ – which delays the application.
According to HMLR, requisitions stop just over 1 in 5 applications being processed first time (opens a new window). More than a million requisitions are sent each year. In 2022, it was reported that over half of these could have been avoided. Basic administrative errors, such as different spellings, undated deeds, missing pages, incomplete addresses, or impossible-to-read handwritten data are all capable of causing delays.
Risks to law firms
At first glance, it may seem as though property owners are likely to face the greatest difficulty from HMLR delays.
One case study with which Lockton is familiar involved a HMLR request for requisitions sent to the wrong email account. The firm became aware that their client had lost priority due to their failure to respond to an email that was not sent to them. Although the firm can point to HMLR’s error, the client may nevertheless criticise the firm for any delay in chasing HMLR.
In another example, a client’s property took a full two years to register. By the time that the registration had been completed, the owner’s agreed-upon mortgage deal had come to an end, moving from 2% to 6%.
But these delays also have consequences for the law firms themselves. Those who fail to inform their clients about potential delays may also expose themselves to potential legal action. In both the above scenarios, firms may be liable either to pay the charges, or to compensate the applicant for the larger mortgage costs.
Where registration takes months, or years, or requires multiple requisitions, law firms also stand to lose through wasted time, resources, and cost. Taking steps to reduce the likelihood of delays, and communicating the prospect of delays before they occur, is therefore vital if firms are to mitigate such risk.
Recommendations:
Inform clients of potential land registry delays in advance, managing expectations with regards to completion dates
Keep records of communication to use as evidence should a lawsuit occur
Discuss delays within the scope of a legal retainer to prevent clients being drawn to external advisors and reduce the likelihood of external litigation
When submitting applications, input data digitally to avoid illegible entries
Conduct pre-submission checks to identify discrepancies and send applications back to case handlers
Run in-house training and workshops to promote best practice and improve quality control
For further information, please contact:
Brian Balkin, Senior Vice President
T: +44 (0)20 7933 2045
