Revival of contractual control agreements

The Levelling-up and Regeneration Act 2023 contained provisions to permit the creation of a register of contractual control agreements – agreements that give third parties control over the use and development of land. The intention was that the register could be used by local authorities, communities and smaller developers to see who was controlling potential development land in their local areas. Last year, draft regulations were published that set out the proposed scope of the register, and the government and HM Land Registry began to consult with the property industry on them. The consultation was put on hold when the General Election was announced but the proposed register has not been forgotten. In letter to the chair of the HM Land Registry board on 6 March, Matthew Pennycook, minister of state for housing, communities and local government, asked HM Land Registry “to continue to work with my officials on reforms to widen and deepen transparency of land ownership and control. In the coming months, I look forward to seeing rapid design and delivery of the digital systems required to collect and publish details of contractual control arrangements, ahead of the planned full public launch of the data collection system in 2026.” Form of the register We do not know whether the register will be implemented in the form originally proposed or whether the new government will introduce alternative provisions for it. However if the register is to be created, we hope that there will be further consultations between the government, HM Land Registry and the property industry to ensure that the register works effectively and fairly. No matter how the register is to be implemented, the property industry will need to start preparing for its introduction, particularly if contractual control agreements created before the regulations come into force have to be included on the register. Identifying those agreements, establishing the information required for the register and ensuring that registration does not breach any confidentiality clauses in the agreements will take time. What will require registration? If the original proposals are to be revived, the agreements that will require registration will be those relating to registered land and that will last more than 12 months. Option agreements, conditional contracts, pre-emption rights, promotion agreements or any other contracts that prevent landowners from making a disposition of their land or that regulate the circumstances in which they can do so were within the scope of the original proposals. Restrictive covenants, overage and clawback agreements, agreements to facilitate finance and loan agreements would not have been registrable. Who will apply for registration? We expect a conveyancer acting for the party entering into a contractual control agreement with the landowner will be required to register via an online portal. The original proposals required registration only where that party is a business, charity or similar organisation or is exercising a public function. What details will be included on the register? The developer is likely to need to provide details of the type of agreement entered into, the names, registration numbers and type of organisation of the parties to the agreement, the date the agreement was entered into, the start date of the agreement, the end date, rights to extend the agreement, any ultimate longstop date, the extent of the property subject to the agreement, title numbers of the land and details of professional advisers. How will the requirement to register be enforced? The original proposals to ensure compliance with the registration requirements were that a contractual control agreement would need to be added to the new register before it could be protected at HM Land Registry by an agreed or unilateral notice or before any restrictions on the landowner making dispositions of the property were added to the land register. Under the 2023 Act, it will be a criminal offence not to comply with the regulations that require the registration of contractual control agreements. What will the impact be? Developers will need to be prepared for greater transparency in relation to their development proposals. Greater transparency will undoubtedly result in earlier engagement between developers and communities about proposed developments. However, with greater transparency, there is a risk that those opposed to development will have more time to prepare objections during the planning process or take other actions to frustrate the development, potentially slowing development or making it more costly. There is also a risk that transparency will drive up land prices. An adjoining landowner who knows that part of their land may be required for a proposed development will be forearmed to inflate the price that they ask for their land, or the rights required over it, to enable the development proposals to proceed. Site assembly might become more costly as a result. Finally, smaller developers may be wary of the requirement to register contractual control agreements. If they have secured a development site and details appear on the register, that information will be available to larger, better resourced developers, who might then seek to promote alternative schemes taking advantage of the opportunity that the smaller developer has identified. Developers may be more reluctant to waste time and money on development schemes if other developers are then able to take unfair advantage of the development opportunities that have been identified. Michael Callaghan is a senior professional support lawyer in the real estate division of Shoosmiths LLP Photo by Romain Dancre/Unsplash