The LRA 2002, together with the LRR 2003 changes the categories of leases that are now either compulsorily or voluntarily registrable, and also the leases that we can note.
Not every leasehold estate is capable of being registered with its own title, but the LRA 2002 substantially extends the scope of title registration, e.g. many more business leases will be subject to compulsory registration.
The information within this guide applies to: —leases dated on or after 13 October 2003;
— leases existing before 13 October 2003;
— assignments, transfers (on sale, by way of gift or by order of court) or assents, including vesting assents, dated on or after 13 October 2003, of existing leasehold estates having more than 7 years of the term left to run.
S.4, LRA 2002 specifically sets out the circumstances when an application for first registration must be made.
(2)
The estate owner or his successor in title must apply for first registration – see s.6(1), LRA 2002.
The period for registration is 2 months from the date of the deed inducing registration – see s.6(4), LRA 2002. However, an order can be made to extend the period of registration – see s.6(5), LRA 2002.
S.27(2)(b), LRA 2002 specifically sets out the circumstances when leases out of a registered title must be registered.
The following sections give details of the events that will require registration if occurring on or after 13 October in relation to leasehold estates in land.
3.1
(1)
New leases granted for a term of more than 7 years out of unregistered land
See s.4(1)(c), LRA 2002.
Leases granted for a term of more than 7 years from the date of the grant, out of either an unregistered freehold or leasehold estates will be compulsorily registrable provided they are:
—for valuable or other consideration – which under s.4(6), LRA 2002 includes estates which have a negative value;
— by way of a gift – see s.4(7), LRA 2002; or
— pursuant to an order of any court.
3.2
(2)
New leases for a term of more than 7 years out of a registered title
See s.27(2)(b)(i), LRA 2002.
Leases granted out of existing registered titles, which are for a term of more than 7 years, from the date of the grant are compulsorily registrable.
3.3
(3)
Transfers or assignments of unregistered leases having more than 7 years of the term unexpired
See ss.4(1)(a) and 4(2)(b), LRA 2002.
Transfers or assignments of unregistered leases, which at the time of the transfers (or assignments) have more than 7 years to run, are compulsorily registrable if they are made:
—for valuable or other consideration – which under s.4(6), LRA 2002 includes estates which have a negative value;
— by way of gift – see s.4(7), LRA 2002;
— pursuant to an order of any court; or
— by means of an assent – including a vesting assent. NB: Not all transfers or assignments attract compulsory registration.
The following are specific types of transfer or assignment which, are not subject to compulsory registration:
— transfer by operation of law, e.g. when a deceased’s property vests in their executors – see s.4(3), LRA 2002;
— an assignment of a mortgage term, i.e. mortgage by demise – see s.4(4)(a), LRA 2002; or
|— an assignment or surrender of a lease to the owner of the immediate reversion where the term is to merge into that reversion – see s.4(4)(b), LRA 2002.
3.4
(4)
Transfers or assignment of unregistered leases where s.171A, HA 1985 applies
See s.4(1)(b), LRA 2002.
All transfers of unregistered leases, irrespective of the length of the term of the lease, made pursuant to s.171A, HA 1985 (Preserved Right to Buy), are compulsorily registrable.
3.5
(5)
Transfers of any registered leases
See s.27(2)(a), LRA 2002.
Most transfers of registered leases, irrespective of the length of the term of the lease are compulsorily registrable. However, the following transfers by operation of law are not required to be registered:
—a transfer on the death or bankruptcy of an individual proprietor;
—a transfer on the dissolution of a corporate proprietor;
— the creation of a legal charge which is a local land charge.
3.6
(6)
Right to Buy leases – Part V of the HA 1985
See ss.4(1)(e) and 27(2)(b)(iv), LRA 2002.
All leases, irrespective of the length of the term of the lease, made pursuant to Part V of the HA 1985, are compulsorily registrable.
3.7
(7)
Leases where s.171A, HA 1985 applies
See ss.4(1)(f) and s.27(2)(b)(v), LRA 2002.
All leases, irrespective of the length of the term of the lease, made pursuant to s.171A, HA 1985 (Preserved Right to Buy), are compulsorily registrable.
3.8
(8)
Reversionary leases taking effect more than 3 months from the date of the grant
See ss.4(1)(d) and 27(2)(b)(ii), LRA 2002.
A “reversionary” lease gives the lessee a right to possession of the leased property in the future, i.e. the lessee does not have an immediate right to possession of the land in the lease, at the date of the lease.
A lease granted out of an:
— unregistered leasehold estate, which at the date of grant has more than 7 years left to run; or
— unregistered freehold estate; or
— existing registered title, which is granted for any term to take effect more than 3 months from the date of the grant is compulsorily registrable.
3.9
(9)
Discontinuous leases out of registered titles or granted for a term of more than 7 years out of unregistered land
See s.27(2)(b)(iii), LRA 2002.
This provision is new under the LRA 2002.
These are leases where the lessee(s) ‘right to possession’ of the land demised is discontinuous. The lease may be of a property, e.g. a flat, apartment or market stall, which is for
—a specified number of days in a week, e.g. every Monday to Friday (inclusive); or
—a specific week(s) in a calendar year.
All discontinuous leases granted out of a registered title must be registered, regardless of the term.
Discontinuous leases granted for a term of more than 7 years out of unregistered freehold or leasehold estates will be compulsory registrable. See ss.4(1)(c) and 4(2)(b), LRA 2002 and see section 3.1 New leases granted for a term of more than 7 years out of unregistered land above.
To calculate the length of the term on such a lease, multiply the number of complete weeks each year the property is demised, by the either the number of years granted or the remaining years for which the lease is to run.
If the total is more than 7 years (i.e. more than 364 complete weeks) – the lease and/or transfer will be compulsorily registrable.
For example: — The term of a lease for two weeks a year for 25 years will be 50 weeks
– the term is therefore under 1 year.
S.3, LRA 2002 gives details of when an application can be made to voluntarily register an unregistered leasehold estate.
The following sections mainly apply to leases which are made before 13 October 2003 and when no events requiring registration have occurred. However, some of the sections will also apply to some leases which are granted on or after 13 October 2003 which can be registered, but may not be subject to compulsorily registration. For example, see section 4.2 Discontinuous leases out of unregistered land below.
The following sections give details of the leasehold estates in land that can be lodged voluntarily for first registration.
4.
(1)
Leases having more than 7 years of their term unexpired
See s.3(3), LRA 2002.
Most leases will be accepted for registration, provided there is more than 7 years of the original term left unexpired at the time of first registration. If the lease is granted on or after 13 October 2003 it will be subject to compulsory registration see section 3.1 New Leases granted for a term of more than 7 years out of unregistered land above.
Where a lessee holds a lease in possession but is granted another lease of the same land, to take effect in possession on or within one month of the expiry of the first lease, the two terms can be treated as creating one continuous term – see s.3(7), LRA 2002. Therefore, if the two terms total more than seven years, we will accept a voluntary application for registration of both leases, which will be registered together on the same title.
NB: S.3(7), LRA 2002 only provides that such leases can be treated as creating one continuous term for the purposes of voluntary registration. There is no provision that such leases are to be treated as one continuous term for the purposes of compulsory registration.
4.
(2)
Discontinuous leases out of unregistered land
See s.3(4), LRA 2002.
This provision is new under the LRA 2002.
See section 3.9 Discontinuous leases out of registered titles or granted for a term of more than 7 years out of unregistered land above as to what constitutes a “discontinuous” lease, and how to calculate the length of the term of the lease.
A voluntary application will be accepted, regardless of the length of the term, i.e. the lease does not have to be for more than 7 years (364 weeks). However, if a discontinuous lease is granted on or after 13 October 2003, or a transfer of a discontinuous lease is made on or after 13 October 2003, it must be registered if it falls within ss.4(1)(c) and 4(1)(a), LRA 2002, – see sections 3.1 New leases granted for a term of more than 7 years out of unregistered land and 3.3 Transfers or assignments of unregistered leases having more than 7 years of the term unexpired above.
To calculate the length of the term on such a lease, multiply the number of complete weeks each year the property is demised, by either the number of years granted or the remaining years for which the lease is to run. If the total is more than 7 years (i.e. more than 364 complete weeks) – the lease and/or transfer will be compulsorily registrable.
For example, the term of a lease for two weeks a year for 25 years will be 50 weeks – the term is therefore under 1 year.
3-
How to apply the LRA 2002 and LRR 2003 – leases which cannot be registered
S.3(5), LRA 2002 specifically details when we cannot accept an application to register a leasehold estate, i.e. if the estate owner (the applicant) has the leasehold estate vested in him as a mortgagee, where there is a subsisting right of redemption.
The following sections give details of the leasehold estates in land that cannot belodged for registration.
5.1
(1)
Leases granted for a term of 7 years or less or where the unexpired
term is for 7 years or less Ss.3(3), 4(1)(c) and 27(2)(b)(i), LRA 2002 state that leases must be granted for a period of more than 7 years to be registrable, or have more than 7 years of the term unexpired. NB: The following are exceptions to this and these leases can be registered irrespective of their term:
—Right to Buy leases, pursuant to Part V of the HA 1985;
—Preserved Right to Buy leases pursuant to s.171A HA 1985;
— Discontinuous leases;
— Reversionary leases granted on or after 13 October 2003 that are to take effect more than 3 months from the date of grant out of:
— an unregistered freehold estate; or
— an unregistered leasehold estate in land for a term which at the time of the grant of the lease has more than 7 years left to run; or
—a registered title.
NB: Some of these leases are compulsorily registrable, see section 3 How to apply the LRA 2002 and LRR 2003 – compulsory registration above for further details.
5.2
(2)
Lease term starts more than 21 years from date of lease
Usually a lease for which a rent or premium is payable, where the term starts more than 21 years from the date of the lease is void – see s.149(3), Law of Property Act 1925. Therefore, such leases cannot be registered.
5.3
(3)
Leases having no certain start date
If no commencement date is stated in the lease, it cannot be assumed it will start on the same date as the lease. Consequently as the term of the lease is not certain, these leases cannot be registered.
5.4
(4)
Lessor and lessee are the same
If the lessor and lessee are the same person or company, holding each interest in the same capacity.
The House of Lords decided that neither one person, nor a company, can create a lease in favour of the same person or company. Any attempt to do so is without legal effect (Rye v Rye [1962] A C 496). Therefore, we cannot give any kind of registered title to such a lease.
5.5
(5)
Public-Private Partnership (PPP) leases
A PPP lease is a lease that constitutes a “public-private partnership” agreement – see ss.210 and 211 of the Greater London Authority Act 1999. The lease will usually be between London Regional Transport, Transport for London or one of its subsidiaries and a private company, for the purpose of maintaining or providing a railway, e.g. an underground railway. PPP leases are not registrable – see ss.90(1), (2) and (3), LRA 2002. They are classed as an interest which overrides both first registration and registered dispositions – see s.90(5), LRA 2002.
5.6
(6)
Leases vested in a person as a mortgagee – subsisting right of redemption
See s.3(5), LRA 2002.
A lease vested in a person as mortgagee where there is a subsisting right of redemption cannot be registered.
