Last week the government opened a new consultation relating to Part 11 of the Levelling Up and Regeneration Act which looks to provide greater transparency on "contractual control agreements" in England and Wales. In the context of this consultation, contractual control agreements refer to contracts which provide a third party with control over land, but which fall short of transferring outright ownership and include:
- Option agreements which grant a third party a right to buy the land within a specified period, should the third party choose to do so.
- Promotion agreements which allow a developer or planning specialist to promote land through the planning process in return for an agreed fee and reimbursement of costs when the land is sold with the benefit of the planning permission being in place.
- Pre-emption agreements which entitle a buyer to the right of first refusal when a landowner chooses to dispose of their land.
- Conditional sale contracts which oblige a third party to purchase land once certain conditions (such as the grant of planning permission) have been satisfied.
Currently there is no legal requirement to record the data from contractual control agreements until such time as the relevant transfer of the land has taken place, which can mean there is an incomplete picture of who controls land prior to such a transfer. The government is now looking to make such information fully accessible to allow communities to find out where land is being brought forward for development, support developers to identify sites and help others to understand where and how land is controlled.
The consultation proposals aim to provide transparency over the important information relating to who controls the land without including irrelevant or commercially sensitive information. This will be achieved by requiring the relevant data from a contractual control agreement to be collected within 60 days of the agreement being entered into.
Any party seeking to protect their interests under such an agreement by way of an application for a notice or a restriction will need to provide the required information from the agreement before the notice or restriction can be registered. If the parties choose not to enter a notice or a restriction, there will still be a requirement to provide specified data to the Land Registry within the same time period. In each case the data is expected to be provided to the Land Registry by a conveyancer to ensure that the information is complete and accurate. It is also proposed that any changes to the original agreement (such as a variation of terms or an assignment of the benefit of the agreement) will be notifiable to the Land Registry within 60 days of becoming effective.
Penalties for failure to comply with any disclosure requirement within the 60 day notice period are expected to be equivalent to offences under the Land Registration Act 2002 and the Economic Crime (Transparency and Enforcement) Act 2022. These include maximum summary penalties for failure to comply (up to six months imprisonment or a £5,000 fine) and up to two years imprisonment and an unlimited fine for knowingly or recklessly providing false information.
The consultation is set to close on 20 March 2024.
We will be closely monitoring the progress and outcome of the government consultation on contractual controls on land but in the meantime if you have any queries, please contact our real estate team.
Joanne Purnell