Home Owners Facing a Billion Pound Property Bill
Almost 1.2million home owners in Scotland are collectively picking up the tab for a land registration bill that could amount to over £900,000,000 as the Scottish Government pushes forward its plans to have all Scottish properties registered in the Land Register by 2024. A bill which, in the opinion of a property law expert at Tayside Solicitors and Estate Agents, Miller Hendry, delivers little benefit for both the home owners and those involved in processing the data.
Alistair Duncan, Partner at Miller Hendry and Head of both Commercial and Residential Property explained:
"While there are clear benefits to having a new digitised Land Register providing clear and up-to-date information about land values and ownership, we are coming across a number of situations whereby clients are having to meet substantial costs with no benefit apparent to them.
"There are a significant number of titles - nearly 1.2million - which are not held on the Land Register, sometimes known as Sasine titles. Until now, certain transfers of properties held by way of a Sasine title followed a straight forward process. However, due to the Government's plans, potential costs for these properties have increased significantly. Existing property owners on Sasine titles actually have perfectly valid rights of ownership and there is no significant or legal reason for it to change their position."
One of the aims of the Land Registration (Scotland) Act 2012 is to speed up completion and modernisation of the Land Register of Scotland. The Land Register, a map-based register of titles, was brought into effect in 1979 to replace the existing General Register of Sasines, also known as the Sasine Register.
Dating back to 1617, the Sasine Register is the oldest public register of land ownership in the world. However, it is not map-based and is instead a chronological list of land deeds. After introduction of the Land Register in 1979, progress of completing the registration of all titles to land in Scotland has been slower than originally thought and, crucially, slower than the Scottish Government would like. Legislation imposing compulsory registration has been introduced but it has been suggested that the supposed benefits are not immediately apparent to property owners and, in fact, the government aim will have homeowners seriously counting the costs of increased fees for no tangible outcome.
The move to the map-based Land Register involves an application for registration of all the relevant titles rather than just the effective deed and requires a one-off examination of all relevant titles and, if required under the new legislation, preparation of a new deed plan and pre-registration Plans Report, which is where additional costs arise.
Alistair Duncan commented:
"The types of transfer affected include transfers where there is no price paid. An example of which would be a gift between husband and wife or parent to child, and where property is inherited from an owner who has died. The additional costs incurred will vary from case to case but, as an indication, the registration of title process will increase legal fees by approximately £600 including VAT. Clients may also be looking at additional costs for deed plans, which are not prepared by lawyers and generally outsourced to surveyors at a cost of around £100, and pre-registration reports of up to £150. These costs mount up so most property owners are facing costs of over £700 for each property, not including the registration dues charged by the Land Register which are based on the value of your property."
Mr Duncan continued:
"The new scheme is undoubtedly affecting those who wish to provide a legacy for their loved ones. In recent years, there has been an increase in the elderly considering equity release schemes and they are set to particularly suffer as a result of Land Registration. From April 1st2016, a remortgage of a Sasine title will likewise trigger a compulsory registration in the Land Register, thereby increasing the costs of remortgaging for some property owners. Again, it is likely that this will impact on elderly clients as many elderly clients have remained in the family home and their titles are recorded in the Sasine Register. People need to be aware that this particular government scheme is currently not a mandatory one but will be compulsory from April 2016."
As an incentive, the Scottish Government are encouraging voluntary registration of Sasine titles by offering a 25% discount on the registration dues charged by the land Register to those property owners who voluntarily register their property in the Land Register but, by doing so, existing property owners will still incur the legal costs and other outlays.
Mr Duncan added:
"As unintended as the consequences of Land Registration may be, the implications are not just affecting home owners but public authorities too, with the Government insistent that their properties are also placed on the Land Register. This is a mammoth task which is tying up legal departments of public authorities across Scotland. It also begs the question of whether it is an effective use of what are already stretched and limited public resources."
For further advice or for information about Miller Hendry, visitwww.millerhendry.co.uk