Official Report 526KB pdf
Registers of Scotland (Voluntary Registration, Amendment of Fees, etc) Order 2015 [Draft]
Joining us this afternoon is Fergus Ewing, the Minister for Business, Energy and Tourism. He is joined by Colin Miller, head of policy; Claire Anderson, drafting solicitor; and Charles Keegan, head of land register completion, all from the Scottish Government. I welcome you all.
We are here to take evidence on a piece of subordinate legislation. I invite the minister to make a statement.
The draft order that the committee is considering today is a significant step in the process towards the completion of the land register, which is one of the key policy objectives underpinning the Land Registration (Scotland) Act 2012. As the committee knows, the Scottish Government has asked the keeper of the registers of Scotland to complete the register by 2024.
The main purpose of the draft order is to provide an incentive to increase the uptake of voluntary registration applications. It seeks to do so in three ways. First, the order provides for a 25 per cent reduction in the fee for voluntary registration across each of the ranges of consideration paid or value. If Parliament approves the order, that fee reduction would come into force on 30 June this year.
Secondly, the draft order provides for the closure of the register of sasines to the recording of new standard securities from 1 April 2016. The effect of that is that a person who owns land that is recorded in the register of sasines would be required to apply for voluntary registration of the title to the land in the land register so that the standard security can be registered. Where voluntary registration is required to allow the registration of a new security in that way, the draft order removes the fee for voluntary registration altogether. Once again, that provision would come into effect on 1 April 2016.
Finally, the draft order removes with effect from 1 April 2016 the keeper’s current discretion under section 27(3)(b) of the 2012 act to refuse an application for voluntary registration.
Registers of Scotland estimates that those provisions, taken together, would result in an increase in the number of voluntary registration applications of the order of 5,000 per annum. Over the period to 2024, when the register is due to be completed, that would equate to some 5 per cent of the total number of unregistered titles.
As I mentioned, although the proposed 25 per cent reduction in the fee for voluntary registration would come into force on 30 June if the order is approved, the remaining provisions relating to the closure of the register of sasines to new securities and the removal of the keeper’s discretion to refuse applications for voluntary registration would not come into effect until 1 April 2016.
Following consultation with interested parties, the reason for allowing that relatively long lead-in time is to ensure that mortgage lenders and others have sufficient time to make any necessary changes to their systems and processes. Registers of Scotland will work closely with all interested parties to ensure that they are aware of the proposed changes and that the process of implementing them is as straightforward as possible.
Although the main purpose of the draft order is to provide incentives to increase the uptake of voluntary registration applications, we have taken the opportunity to make a number of relatively minor changes to land register fees. The first is to provide that a disposition for the sole purpose of evacuating a survivorship destination is to be charged at a fee of £60 for each title sheet that is affected, instead of a value-based fee, which in some cases—as the convener will know—can be prohibitive.
Secondly, the draft order provides that the current fee of £30 where an application is rejected or withdrawn will not apply where the sole reason for rejection or withdrawal is that another related application in respect of the same land or title number has been rejected or withdrawn.
Finally, the draft order provides for the keeper to be able to charge a small fee of £16 plus VAT, or in one case £30 plus VAT, for copies or extracts of documents, such as a copy of a search sheet from the register of sasines.
The main proposals that are set out in the draft order were included in the consultation on land register completion that took place between July and November 2014, and they were finalised after further stakeholder workshops and feedback from business, the legal profession and mortgage lenders.
I believe that the provisions that are set out in the draft order will be a significant step forward in the journey towards the completion of the land register, which will be a major national asset for Scotland. I am happy to respond to any questions that members may have.
Thank you, minister. Do members have any questions?
I am sure that we all welcome steps towards the completion of the land register. Can the minister tell us the level of income from fees that will be foregone if the increased registration rate that he anticipates is implemented?
Well, it will be 25 per cent.
Which amounts to what, in terms of the overall cost to the taxpayer to administer the register?
I think that Mr Keegan can answer that question.
First, Registers of Scotland has its own income from its own fees so we do not take anything from the taxpayer directly except through applications.
With regard to the number of voluntary applications through the process, we would expect there to be approximately 5,000 a year, which we estimate based on our average fees at around £1.3 million. Obviously that depends on the level that comes through due to market activity, and how attractive the 25 per cent discount will be to applicants.
Mr Harvie makes a reasonable point, but it would be reasonable for me to point out that the purpose of taking this step is to meet the objective of the 2024 timetable, which I think Mr Harvie supports. In one sense, if we do not make this change, many of the 5,000 applications that we anticipate may not arrive. In other words, the change may not actually lead to reduced income; it may lead to more applications that would not otherwise come if we did not make the change.
Therefore, if there are more applications than there would otherwise have been, one could argue—time will tell; I am not making an assertion one way or another—that, if we have 5,000 more applications that we would not have had, or if we would otherwise have had only 1,000 or 2,000, the fee for each application would be reduced but the global aggregate income may in fact be increased.
I just required a moment’s reflection to deal with Mr Harvie’s perfectly reasonable question. I should make the point that the change will not necessarily result in a drop in income for the keeper. It could actually result in an increase in income, and of course is a policy imperative that I assume Mr Harvie supports.
I was not seeking to argue against the course of action; I simply wanted to understand the scale of the amount of income from fees that would be foregone in comparison with a situation in which registration is required and fees are required to be paid, too.
I have a question in a similar vein, minister. Are you satisfied that, if an extra 5,000 transactions will be coming to Registers of Scotland, the organisation has the capability and staff to handle them? It is quite likely that some of the applications for voluntary registration will involve quite complex titles and large estates that have sold off little parcels of land over the years, or historic titles that are perhaps not plan based. One can see that there may be quite a substantial increase in workload for Registers of Scotland staff. Are you satisfied that the capability exists to deal with that increase?
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Yes, I am. I have had the benefit of working with the keeper for several years now and I am absolutely confident that her staff will deal with the work and do so extremely professionally.
Claire Anderson has pointed out to me that, had we not made the changes that we propose to make in the draft order, the method of dealing with matters would have been to require a keeper-induced registration rather than a voluntary one. Were the status quo to apply, a keeper-induced registration would attract no fee. Therefore, it is necessary to move to the lower fee to obviate the situation that would have resulted in the use of the keeper-induced method to attract more registration on to the register of titles, perhaps held in trust of the state. That is a technical point but it is correct for me to put it on the record.
I think that I am right in saying—my colleagues might be able to help me—that 5,000 is a large number but a small one in comparison with the number of annual property transactions, which I think is in the order of 200,000 or 300,000. Perhaps Mr Keegan or Mr Miller can refresh my memory and the committee’s.
It depends on market activity, but we currently get between 300,000 and 400,000 applications a year, so the 5,000 would not be an insuperable additional number.
If I had an unregistered title and I wanted to submit it for a voluntary registration, I would be charged a fee but, if I did nothing and, eventually, the keeper came along and induced it, I would not have to pay any fee at all. Why would I not just wait?
Claire Anderson will answer that question.
The benefit of voluntary registration is that a solicitor is involved in the process and it is more likely that there will be a grant of the keeper’s warranty, which is a particularly good benefit for the title owner. In the case of a keeper-induced registration, it is less certain that that warranty would be granted.
So it is a job creation scheme for solicitors. It is all the more welcome for that.
To be serious, I have advocated voluntary registration to people who have substantial landholdings and their representatives. I did so in 2011 and 2012 for that reason. At that time, many of the big firms in Scotland were laying off young solicitors. Therefore, for a long time, I have advocated the idea that landowners in particular should play a part in helping to generate work that enables us to avoid shedding the services of young solicitors at a most difficult time.
I hope that we have moved on economically since then, but the argument remains the same. If voluntary registration is taken up—I am confident that it will be—it will help to secure legal work for young practitioners and will give them good experience at the beginning of their careers. I expect that they will end up doing quite a lot of the hard work, actually.
This is perhaps a silly question, given the legalities of the matter. If we are making a point of trying to get as many people as possible to register, what will be the mechanism for communicating it as widely as we possibly can?
It has already been communicated fairly widely. We have had the Land Registration (Scotland) Act 2012 and members of the committee played a part in bringing that to fruition. The keeper has also had meetings with stakeholders. I think—I will ask Mr Keegan or Mr Miller to expand on this—that there was recently a meeting with 26 solicitors who have clients who are likely to be able to avail themselves of the draft order’s provisions.
In Registers of Scotland, we have good contacts with solicitors and the surveyor community, so we will send out information to them electronically. As the minister said, we have also had a number of meetings with key stakeholders and professional advisers of particular groups of landowners to explain the benefits of voluntary registration. Working on the land register, it was encouraging for me to hear those stakeholders thinking about being on the land register as a better thing. We are working out what we could do to help them in the pre-registration world by providing information to them in different formats from those that we have used before. The landscape is encouraging.
Very good.
There are no further questions for the minister, so I point out to members that the Delegated Powers and Law Reform Committee considered the draft order on 26 May and no points arose in relation to it.
Motion moved,
That the Economy, Energy and Tourism Committee recommends that the Registers of Scotland (Voluntary Registration, Amendment of Fees, etc.) Order 2015 [draft] be approved.—[Fergus Ewing.]
Motion agreed to.
Are the committee members content for the convener and the clerk to produce a short, factual report of the committee’s decision and arrange for it to be published?
Members indicated agreement.
We now move into private.
12:51 Meeting continued in private until 13:02.Previous
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