The new Solicitors Accounts Rules: what has changed?
In March 2016 the government launched a consultation relating to a resurrected plan to (at least partly) privatise Her Majesty's Land Registry.
The Land Registry is estimated to be worth around £1.2bn and, given that one of the main drivers for sale is the government's objective of maximising capital receipt, it is not surprising that this proposal has been revisited.
At present the registry is entirely self-funding: it is required to ensure that its income from fees covers all of its expenditure under normal operating conditions. This includes expenditure under the indemnity scheme. In fact, the Land Registry consistently operates at a surplus and assuch is a net contributor to the government coffers.
The consultation closed on 26 May 2016. The proposal is that ownership of the registry remains with the crown, but all services be performed by a private company, incorporated for that purpose. The proposal includes the idea of a state-backed guarantee to replace the current Land Registry indemnity. At present, this scheme provides indemnification in the event that, inter alia, a mistake on the register causes a loss to be suffered. If, as proposed, following privatisation, the indemnity is replaced with this guarantee, the effect would appear to be that the profits would be privatised, with the risk remaining with the state. Another purported reason for privatisation is to increase the registry's efficiency and effectiveness. The registry performs functions which are integral to the smooth running of property transactions. Not only does it hold over 24 million titles to land, it also adjudicates on disputes relating to land.
Despite the varied nature of its services and functions, as of January 2016, the registry had a customer satisfaction rating of 95 per cent. As such, it does not appear that the general public feels there is much need for an increase in its effectiveness or efficiency. Numerous organisations took part in the consultation. The Competition and Markets Authority expressed concern about a private company having control of all the data relating to land ownership in the UK, and control of the systems required to access that data. In such circumstances, conditions could be put in place (financial or otherwise) which might restrict access to that information.
Meanwhile, the Law Society's response to the consultation raised concerns about security, transparency, accountability, and impartiality. The importance of an impartial Land Registry was also highlighted by a former chief land registrar in respect of the confidence the public needs to have in it.
Regardless of your area of practice, it is likely that at some point you will undertake searches to discover who owns a property, whether it has a charge on the title, or the extent of a title. The ability to undertake such searches quickly, at minimal cost, and with the certainty that the data obtained can be relied on, with the benefit ofan indemnity, is not one which should be underestimated by private client, property or litigation solicitors.
The government says that there is no compelling reason to keep the registry in public ownership and that a sale would release funds which could be used elsewhere. While a further period of economic uncertainty looks increasingly likely, the solution should not be sought in selling off an organisation which performs such an important public function, and performs it so well.
This article first appeared in the Solicitors Journal July 2016.
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