UK government concludes consultation on contractual controls on land

Part 11 of the Levelling Up and Regeneration Act (LURA) 2023 came into force on 26 October 2023 and gives the secretary of state new powers to make regulations to require the disclosure of information relating to interests and dealings in land. The aim is to achieve greater transparency around land ownership and control in England and Wales.

Most of the LURA's provisions will not come into force until secondary legislation is in place. Accordingly, a Department for Levelling Up, Housing and Communities consultation recently sought views on its proposed draft regulations, including plans to introduce a public register of contractual control agreements (CCAs), which it says will provide a reliable and accessible source of information for communities, developers and stakeholders. 

The consultation closed on 20 March 2024 and its findings are awaited; however, the documents that will be caught have been set out and the likely implications are already clear. The regulations are expected to be implemented on 6 April 2026.

In-scope agreements and exclusions

The majority of agreements used between developers and landowners to secure land for development will be classed as CCAs. Agreements will be disclosable if those agreements are in writing, subsist for 12 months or more and qualify as a disclosable agreement under the LURA.

Disclosable agreements will include option agreements, pre-emption agreements, conditional contracts, and promotion agreements, which facilitate development and provide for the property to be marketed or sold once conditions have been met. If an agreement does terminate within 12 months, but includes a right to extend the agreement, it will also be caught. 

Some agreements are excluded from the scope of the regulations. These include those that terminate within 12 months with no right to extend and that facilitate finance and loan agreements, as well as overage and clawback agreements and restrictive covenants.

The published information

If the CCA is within the scope of the regulations, provision of the following details will be mandatory and will be made publicly available:

• the type of agreement;
• the parties;
• the date the agreement was entered into, any fixed start dates and the end date;
• the geographical extent of the agreement and the relevant HM Land Registry title numbers;
• the Solicitors Regulation Authority number or similar of the professionals involved in preparing the agreements; and
• details of any rights to extend the agreement.

Deadlines for registration

Timing for registration and how and when the mandatory information should be provided will depend on when the CCA was entered into. For new agreements, those with the benefit of a CCA must provide the mandatory information within 60 days of it being entered into. 

For existing CCAs that have been entered up to five years before the commencement date of the proposed regulations (which is expected to be in April 2026, so from 6 April 2021 to 5 April 2026), there will be a 12-month period from the commencement date to provide the mandatory information. CCAs entered into prior to April 2021 may also be caught if they are varied in such a way that alters any of the information required under the LURA or if they are assigned after the date of commencement of regulations.

There will also be a continuing obligation to update the mandatory information within 60 days of any changes to any applicable CCA. 

Penalties for non-compliance

It will be a criminal offence to fail to comply with the requirement to provide the mandatory information or to provide false or misleading information. Both offences are punishable by a fine or imprisonment or both and where legal entities are involved (that is, non-individuals), the relevant officer could be liable for the offence. Additionally, if the mandatory information is not provided then HM Land Registry may refuse to register a notice or restriction against the relevant title number.

Worrying retrospective effect

As the regulations are intended to apply to new agreements and existing agreements entered into from 6 April 2021, this will require those entering into CCAs to review their historic agreements carefully. It suggests a worrying trend towards new legislation applying retrospectively. As with the proposals to abolish residential ground rent, the regulations seek to impose new rules on transactions which were entered into many years ago.

Increased burden and cost

The retrospective and ongoing nature of the LURA will mean that developers and landowners will need to keep accurate records, review existing and proposed agreements and keep CCAs under review. 

If the mandatory information is to be provided by a lawyer, this will inevitably increase transaction costs for new projects. The regulations will also present a costly task for developers as they (or their lawyers) review, compile and provide the information in respect of any historical agreements which are caught.

The Land Registry are already overburdened and experiencing long delays. There is a question as to whether the Land Registry will be able to cope with the increased administrative burden as a result of any new regulations.

Unregistered land

Unregistered land is not captured. Although first registration is often triggered, or applied for, when development is in prospect; unregistered land should be included to avoid a significant hole in the national picture.

Early notice

One unintended consequence of the regulations may be that the register provides early 'notice' to those who may wish to object to development. This may lead to less development as those who wish to object are afforded more time to mount a challenge to any future planning application. There is also a risk that this discourages landowners from entering into such agreements. This is not the proposed purpose and could lead to developers, and landowners, needing to manage local sentiment from a much earlier stage.

Commercial confidentiality

Whether it is necessary to include some of the details in the dataset, such as the length of the agreement, is arguable. The length of the agreement is commercially sensitive and may risk giving competitors an advantage in providing them with the necessary information to approach landowners towards the end of any option or contract period. In turn, this may simply serve to stall development as landowners are approached with new offers. The changes have the potential to impact landowners' behaviour too.

Osborne Clarke comment

The changes proposed by the Department for Levelling Up, Housing and Communities will increase transparency in a very literal sense – as information that would not have been previously available will become publicly available.  However, whether the effect of this will be positive is unclear.

If the expectation is that the LURA will allow other developers to more easily identify land that is available then this seems this misplaced. Most developers will already be aware of what land in their area is tied up by other developers and the majority already benefit from a network of land agents. Instead, the published information may simply create time for communities to take action against development. For example, making a town and village green application prior to the submission of a planning application.

Developer secrecy has been blamed in the past for causing the housing crisis but the housing crisis itself is a vast and nuanced issue, which can also be put down to government policy and planning failings. At the very least, it would seem prudent to trial the proposed changes (possibly in certain regions) to test the benefit of providing such information, before the secondary legislation requiring costly disclosure is enacted and comes into force.