If you own a plot of land, what happens if you want to subdivide it into smaller plots? Maybe you want to make sales of those new individual plots simpler in the future or your lender is offering a better mortgage rate where smaller individual plots are given as security rather than one large plot. Sales of parts of a large plot can involve lengthy negotiations about rights of way over neighbouring land or restrictive covenants, or involve the creation of new companies to deal with services and management of any common parts. Creating a commonhold title can resolve these very neatly and effectively but it can be a lengthy and complex process. Is there a simpler way?
As is often the way, the answer is qualified. There is a relatively unpublicised method that the Land Registry can use to split one registered title into two registered titles where ownership of the resulting titles is to remain unchanged. It’s a discretionary solution which is probably why it’s not so well known, and involves a simple form, a small fee, a plan and a written explanation. The plan would have to be Land Registry compliant, which can be fairly onerous to achieve, and the explanation must cover two areas in detail.
Firstly, what is the benefit to the applicant (the landowner)? This is often straightforward, a simple financial explanation that two plots of land would lead to a lower mortgage rate for example. The second part is trickier, as it needs to cover the benefit to the Land Registry of splitting the title. Some plots may have the burden or benefit of wide ranging covenants, which can lead to lengthy investigations on the part of the Land Registry as to which land these covenants would continue to burden or benefit following a split, or rights of way over neighbouring land which cannot continue to benefit both titles. While these issues could be covered in the initial application, the Registry would still have to investigate, and it is by no means certain that any given application would be successful. Even the Land Registry has to consider carefully how best to use its resources.
Where an application is successful, there is no guidance as to how long the process might take. Depending on the reason for wanting to split the title in the first place, sometimes the uncertainty over when (or even if) the application might be resolved outweighs any benefit that might have been gained from it.
Posted on 5 February, 2020 by Ortolan