Mind the Gap! The Registration Gap: Does it Really Matter?
27th November, 2023
With anticipated timescales extending into 2025 for HM Land Registry to complete new applications, we discuss why it is important to consider this before completion of a transaction and what steps can be taken to mitigate the issues that may arise during the registration gap.
What is the registration gap?
It is the period of time between an application being submitted to HM Land Registry and the application being completed. Guidance from HM Land Registry indicates the following timescales for completion of applications:
- Changing a name/updating the existing register: 4 weeks with most applications completed in 3 months
- Creation of new registers (for example transfers of part/new leases): 13 – 22 months.
Unfortunately, these timescales are often exceeded. There is the possibility to seek an expedite of an application in limited circumstances although it is at HM Land Registry’s discretion whether to accept this. Timescales will also slip even further where there are multiple pending applications against one title.
Why is it important?
During the registration gap, the legal ownership remains with the seller. It is only once HM Land Registry complete an application that the buyer’s legal title is backdated to the time the application was made. Until then, the buyer is an equitable owner only which can present difficulties when seeking to deal with the property.
What rights are affected?
A buyer’s ability to sell, lease or charge its property is not affected. However, other rights are impacted as follows:
- A tenant’s ability to exercise break rights where it has taken an assignment of a registered lease
- Landlord notices to quit being served on tenants where the transfer of the freehold reversion is pending
- Whether a tenant should seek to surrender its lease to the registered landlord on the title or the new landlord whose title is pending.
What could be a solution to this?
The registration gap may not always be an issue but given the increasing timescales for HM Land Registry to deal with all types of applications, it is likely to cause issues for some property owners who are actively seeking to manage their property, especially in the context of leasehold sites. Options to mitigate the risks include:
- Buyers seeking to obtain powers by irrevocable appointment as the seller’s agent, to act in their name to deal with a range of matters arising in the gap. This could cover serving of notices, commencing proceedings or taking any other action in relation to the property as needed
- Including property management provisions in the sale agreement which operate until registration is completed.
It looks like the registration gap and the issues that arise from it are here to stay in the short term. Making your solicitors aware of any actions likely to be needed for your property following completion is key to allow for such issues to be mitigated against as far as possible.
If you are concerned about how the registration gap might impact your property transactions, contact one of specialist property lawyers for further information.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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