Land Law in England and Wales - 2

Land Law in England and Wales:
The Challenges of Modernisation

By: Paul Omar of Gray's Inn, Barrister
Senior Lecturer, University of Sussex

The major statutory reforms of 1925-1926 affecting land law in England and Wales resulted in the Law of Property Act 1925, which confirmed the relative ownership model, in which the free simple absolute in possession (colloquially known as the 'freehold') and the term of years (leasehold') are the two methods of signifying the greatest interest inland. Also part of that omnibus of reforms, the Land Registration Act 1925 (LRA 1925') continued a system of title by registration introduced near the end of the Victorian era. Statutory developments since these major reforms have been sporadic and of minor impact until the Land Registration Act 2002 (LRA2002), which came into force on 13 October 2003. This Act deals not only with registration issues but with some substantive changes to land law. The rest of this article (see Land Law in England and Wales - 1) looks at some proposals for future changes.

4. Changes to Come
The position in the wake of the LRA 2002 is unlikely to remain static. There are important developments at the domestic level in relation to unfinished business in law reform terms. Furthermore, there may be an increasingly important European dimension to law reform.

(i) Land Burdens
The law Commission recommended as long ago as 1966 the creation of a new scheme of land obligations and the possible unity of the law relating to covenants and servitudes, perhaps using the example of Scotland where there exists a unified system of land burdens. The utility of the covenant scheme is still recognized by the Law Commission, who have stated that, although there is a potential overlap between the planning law regime under the Town and Country Planning Act 1990 and the private enforcement of covenants, covenants remain often necessary to preserve the character and standard of old and new developments. Nonetheless, a new category of land obligation could, if created, encompass all types of covenant and avoid the inconveniences of arguments over the transmission of benefits or burdens and the impact of the privity rule, as stated in Austerberry v Oldham (1885)29 Ch D 75. The issue of how long such private planning schemes should bind land has also been treated, with the Law Commission recommending in 1991 (Law Com. No. 201) that covenants should lapse 80 years post-creation with replacement by any 'new' land obligation noted on the Land Register. For servitudes, the views of the Law Reform Committee as early as 1966, noted by Kevin and Susan Gray I their book 'Elements of Land Law' (2002, Oxford University Press at paragraph 8.168), were hostile to the idea of the prescriptive acquisition of servitudes being able to continue as devoid of any 'moral justification' because of its representing a process that could be wholly accidental or involving the desire to 'get something for nothing. Later recommendations, while not as hostile, would have limited the prescription of servitudes and profits to the scheme under the Prescription Act 1832. In any event, reforms proposed in this Consultative Document were put on hold pending a comprehensive review of the law of servitudes absent any justification for unilateral action in the context of registered land and improvements to the registration system. Reforms to the law in this area have recently been announced by the Law Commission, who intend resuming the work initiated in 1991 and will be publishing a consultation paper on this issue towards the end of 2007.

(ii) The Remnants of Feudal Theory
Demesne land is that land held by the Crown over which no fee simple has been created. Part 7 of the LRA 2002 deals with this relic of feudal tenure. Section 79 states that Her Majesty may grant a freehold to Herself. This was previously impossible because of the doctrine of merger where any minor estate merges with the major estate, in this case the allodium of the Crown. Section 85 makes rules for bona vacantia, where property may, fora number of reasons, reverts (or escheats) to the Crown, who is the ultimate feudal superior. Although the number of properties that succumb to the traditional type of escheat; escheat pro pter defectum san guinis (for defect of blood, i.e. lack of heirs) amount to less than fifty properties a year, escheat for other reasons is more important, amounting to nearly 500 properties per annum. This occurs chiefly in the context of insolvency, where liquidators may under sections 178 and 315 of the Insolvency Act 1986 disclaim property because it is onerous. This is usually the case where property is encumbered by charges or interests that render its value to creditors negligible. Proposals for reform exist, which will seek to rationalize this last vestige of the feudal theory as the Law Commission has recently announced a review of this area to take place sometime in late 2007- early 2008.

(iii) A Future Role for Europe
The membership of the United Kingdom in the European Union has a potential land law dimension in the context of the formation of a Europe-wide Internal Market for goods and services. Barbara Bogusz has suggested that the e-conveyancing initiative will have the knock-on effect of improving access to land information within the Internal Market, consequently enabling lending institutions to offer mortgage services across frontiers. This will, she suggests, inevitably cause competition and perhaps result in more competitive interest rates for consumers ('Bringing Land Registration into the Twenty-First Century The Land Registration Act 2002 [2002] Modern Law Review 556 at 566). Furthermore, cross-border payment schemes facilitated by an agreement between the European Central Bank (representing the Euro-zone) and the Bank of England will enhance, in this context, the operation of the freedom of movement for capital, one of the pillars of the EC Treaty. Similarly, the participation of the Land Registry in a project titled the 'European Land Information Service' is designed to enable consumers in the currently and predominantly domestic markets to have a common portal for access to land information and potentially registers across all participating states. In terms of substantive law, Article 295 of the EC Treaty establishes that the rules in Member States governing the system of property ownership cannot be the subject of regulation or intervention by European institutions. Nonetheless, there are proposals in the field of security interests (the 'EuroHypothec') as well as the creation of a common European Contract Law (and possibly a European Civil Code) that could have an impact on asset security arrangements. These proposals are based on arguments centering on the obstacles to the completion of the Internal Market that the current fragmentation of security systems in Europe represents. It is noteworthy that the agenda for reform in this area has moved to the European and international levels, with texts such as the EBRD Model Law on Secured Transactions 1994 and the UNCITRAL Draft Legislative Guide on Secured Transactions 2006 influencing work in this area.

According to Martin Dixon, a noted Cambridge academic, the LRA 2002 and its predecessor, the LRA 1925, are reflections of the technology of the day. The Land Register was the invention of the Victorian era, just as electronic communications and 'high-tech' are the bywords of the modern age ('The Reform of Property Law and the land Registration Act 2002: A Risk Assessment' [2003] Conveyancer and Property Lawyer 136). The aim of these inventions, ancient and modern, was to simplify land transactions with any substantive changes being geared to the achievement of that objective. As noted, the aim of the LRA 2002 is apparently to bring conveyancing into the 21st century with all the benefits and disadvantages that entails. Has it succeeded? A five-yearly review was recommended by the Law Commission as part of the process of ascertaining whether the reforms introduced by the LRA2002 in fact do work. It has now been nearly five years since its enactment and it is likely that the review will soon be launched by the Land Registry. It is likely that the review will tell us more about the success of the registration scheme. It might be wise to reflect on the transition from the pre-1925 regime to registration in the Lra1925, which was quite arduous and at times a slow and lengthy process. It remains to be seen whether the transition to the post-2002 dispensation and the wonders of technology will prove as problematic.

Land affairs
Land Affairs

The author would like to acknowledge the kind invitation by Professor André Boraine of the University of Pretoria to deliver a paper to the Pretoria and UNISA Property Law Group in May 2007, on which this summary is based.

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