Closing the gap: tackling delays in Land Registry registration

The Land Registry registration gap is, unfortunately, nothing new, with registration delays exacerbated by COVID-19. Many an article titled "Mind the Gap" has highlighted the disruption that delays in registering legal title can cause. The issue doesn’t appear to be going away any time soon, with anything other than the most mundane applications often taking several months (even over two years!) to be completed.

The registration gap: a reminder

Legal title to freehold and leasehold registered property does not pass to the new owner until it is registered as proprietor at the Land Registry. This also extends to the grant of registrable leases (being leases granted for a term of more than seven years or granted to take effect more than three months in the future).

The "registration gap" refers to the time between the completion of the registrable disposal (eg the transfer or lease) and the registration date at the Land Registry. During this gap, the property purchase or lease interest is held "in equity". This means that the legal interest remains with the seller or landlord, who then holds the property on trust for the buyer or tenant until the registration is completed, while in the meantime the buyer or tenant receives the beneficial title only.

So protracted is this gap now that sale contracts commonly contain standard wording ensuring that until registration is complete, either the seller will appoint the buyer as its agent (eg to serve notices and commence proceedings, should these be required) on the seller’s behalf, or the seller will be contractually obliged to provide assistance to the buyer. A break notice, for example, must only be served on or by the legal owner of the property. Given how important these notices are, not to mention time-sensitive, it is vital that the new buyer has the necessary powers to act.

What are the impacts of the gap?

Aside from the administrative impacts of the registration gap, and given the longevity of the issue, this has real potential to affect the market. From buyers to sellers, lawyers to lenders, parties routinely require assurance as to the correct "owner" of a property, as the Land Registry records cannot be relied upon where there are pending applications. Documents are redrafted and contractual arrangements are put in place to mitigate the impact of these delays. All of this incurs time and costs, as well as adding doubt and risk into a transaction.

A notable example of the practical effect of the delay is where a company has sold its interest in a property, but cannot be wound up until the registration of the disposal at the Land Registry (many months, or even years, later) has completed. This issue is compounded where you are dealing with an overseas company which is subject to a requirement to register on the Register of Overseas Entities (ROE), which then must continue to comply with the ROE reporting requirements under the regime throughout this period. In these scenarios, wasted costs are spent running dormant companies and complying with various regulatory regimes while the registration is pending at the Land Registry.

More broadly, while foreign and domestic investors will realise that the delays exacerbated by the COVID pandemic and the associated costs were inevitable, five years on, there is growing frustration that the registration gap remains so significant.

What’s new?

Fear not – there is hope on the horizon (hopefully). The Government announced in early February 2025 that it was "opening up key property information, ensuring this data can be shared between trusted professionals more easily, and driving forward plans for digital identity services to slash transaction times."

Indeed, the Land Registry Act 2002 created a framework in which it will be possible to transfer and create interests in registered land by electronic means as, in the Act’s own explanatory notes, "it is envisaged that the execution of those documents and their registration will be simultaneous." 23 years on, however, a fully electronic system is something we are yet to see. Quite what form this new age of fully digital completion and registration will take, we shall have to wait and see; not to mention the existing backlog which will, of course, have to be processed.

Clearly, the Land Registry is conscious of the need to drive digitalisation. In its February 2025 press release, it stated that “the move to digital is a crucial part of our efforts to provide a faster registration service.” In a letter dated 3 March 2025 to the Minister of State for Housing, Communities and Local Government, the Land Registry also thanked him for supporting its work “to create a fully digital, geospatial land register that is fit for an AI- and data-driven economy.” For now, we can take some comfort in the targeted efforts of both the Government and the Land Registry in this area. Watch this space.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, March 2025