Contractual controls agreements – consultation

On 24 January 2024, the Department for Levelling Up, Housing and Communities (DLUHC) launched a consultation containing proposals that require compulsory disclosure of data in “contractual controls agreements”.

Lauren Pearson, senior associate in Lodders’ Real Estate group, explains the aims behind the proposals, their possible implications, and why developers and landowners should have a say in the consultation.

What are the proposed regulations?

In a bid to increase transparency around who controls land, the regulations put forward by the DLUHC aim to collect information on contractual control agreements, such as option agreements and promotion agreements. These agreements typically allow for the control of land by a third party without the need to change ownership of it.

In line with the new regulations being proposed, certain details of these agreements will need to be submitted to the Land Registry and subsequently made available for inspection on a publicly available register.

Presumably, this additional record keeping is intended to tackle perceived land banking by developers – the act of purchasing large quantities of potentially developable land with no immediate intention of building on it.

The consultation is due to close on 20 March 2024, with the new regulations anticipated to come into force in England and Wales on 6 April 2026. Landowners and developers can make a response to the consultation online here.

What types of agreement will be affected by the new regulations?

Put simply, an agreement will fall within the remit of the new regulations if it “facilitates the future development of an estate in land”. This includes (but is not limited to): 

• Conditional contracts
• Option agreements
• Promotion agreements
• Pre-emption agreements

Please note: the regulations will apply retrospectively to any existing agreements entered into on or after 6 April 2021. A one-year period from 6 April 2026 is expected to be permitted for these retrospective applications to be made.

Those who have entered into any of the above type of agreements since 6 April 2021 will need to bear this in mind once the regulations come into force. The application process will no doubt involve going back through old files and is likely to be time-consuming.

Which agreements will not be affected?

There are some types of land agreements that will fall outside of the remit of the new regulations and subsequently will not require publication on the register. These include:

• Overage deeds
• Restrictive covenants
• Agreements made to “facilitate and finance agreements”
• Short term agreements which terminate within 12 months or less (unless there is a contractual right to extend the duration beyond 12 months)

Who will be impacted by the new regulations?

Residential and commercial property and mixed-use developments will all be affected by the regulations proposed in the consultation.

Specifically, those facing the heaviest impact will be landowners, developers, land promoters and local authorities. The “beneficiary”, which in most cases will be the developer, will have the obligation of submitting the information to the Land Registry.

What are the registration requirements?

If an agreement falls within scope, certain data from it (rather than the agreement itself) must be submitted to the Land Registry. The requirement to provide certain data only is intended to create a balance between commercial sensitivity and the need for transparency.

It is proposed that the following information is to be submitted to the Land Registry:

• The type of agreement
• The identities of the parties which have entered into the agreement
• The timeframes included in the agreement, such as the termination date and whether the agreement contains any right to extend the timeframe
• The extent of land affected by the agreement, including title number(s)
• The registering conveyancer’s details as held at the Solicitors Regulation Authority
• Where the agreement is later varied or assigned, such updated details must be submitted thereafter

Notably, the financial terms of any agreements will not need to be disclosed and can remain confidential between the contracting parties.

The proposed timeframe for submission to the Land Registry is 60 days from the date on which the new land agreement is entered into. A conveyancer will be required to notify the Land Registry in the hope that this will increase the accuracy of such applications. Fines and criminal sanctions will be imposed upon those who fail to comply.

Ultimately, making submissions will increase the administrative burden on the conveyancer and the associated legal fees for the client. It will also add to the workload of the Land Registry itself, which is already under severe strain.

What are the implications for developers and landowners?

To a certain extent, details of contractual control agreements are already noted on Land Registry titles by way of a title restriction and/or notice; there is already some visibility on the type of agreement, who has entered into that agreement and the land which is bound by that agreement. However, there is no current legal requirement for this, so this is not always the case.

Collating the information in one publicly available register could make the process of finding out who has an interest in land easier and more accurate for those who are interested, so potentially may be of assistance to land promoters, developers and their advisers. But whether the benefits of this outweigh the increased administrative burdens and costs, or even if these proposals will still come into force (in some form) after this year’s general election, will remain to be seen.

Response to the DLUHC consultation

As mentioned above, the consultation is due to close on 20 March 2024. If you are a landowner or developer and would like to make any response to the consultation, you can do so online here.

Get in touch

Lodders’ award-winning Real Estate group works tirelessly on behalf of our clients, finding speedy and effective solutions. For advice or help with your property transaction, please get in touch.