Land Registry Requirements for Development Finance Applications

The Land Registry is the government body responsible for registering ownership of land and property in England and Wales. It maintains a register of over 26 million titles, each of which records the owner, the extent of the land on a title plan, and any interests affecting the land such as mortgages, easements, and restrictive covenants. For development finance lenders, the Land Registry is the authoritative source for verifying that the borrower owns the site and that the lender can take a valid first legal charge over it.

When you apply for development finance, the lender's solicitor will obtain official copies of the title register and title plan from the Land Registry. These documents cost £3 each and are available online within minutes. The title register comprises three sections: the property register, which describes the land and any rights benefiting it; the proprietorship register, which identifies the owner and any restrictions on their ability to deal with the land; and the charges register, which lists all mortgages, charges, and other financial encumbrances registered against the title.

The title plan shows the extent of the registered title, outlined in red, against an Ordnance Survey base map. Importantly, the Land Registry title plan identifies the general boundaries of the property rather than the exact boundaries. This general boundary rule means that the title plan does not definitively show the precise position of boundary features such as walls, fences, or hedges. This can become relevant in development finance transactions where the proposed building footprint is close to the boundary, as we will discuss later in this guide.

When an SPV purchases a development site, the transfer must be registered at the Land Registry within the priority period of the official search. The lender's solicitor will conduct an official search with priority, known as an OS1 search, before completion. This search provides a priority period of thirty business days during which no other registrations can be made against the title. The solicitor must submit the application to register the transfer and the lender's charge within this priority period to ensure that the lender's security ranks ahead of any subsequent interests.

For most straightforward transactions, the registration process is handled by the solicitor as part of the post-completion formalities and takes between two and eight weeks. However, some transactions trigger a requisition from the Land Registry, which is a request for additional information or documentation. Common requisitions include queries about the company's authority to enter the transaction, discrepancies between the transfer and the title plan, and questions about whether the transaction triggers a requirement for consent from a third party. Requisitions add time and cost to the process.

First registrations are more complex. If the development site is unregistered land, the first dealing with the land, whether a sale, mortgage, or long lease, triggers compulsory first registration. The application for first registration requires extensive documentation including the original title deeds, an index map search, a statutory declaration explaining the chain of ownership, and a form DL listing all documents being lodged. First registration typically takes three to six months and can delay the lender's ability to register its charge. We always advise developers to check whether their title is registered before proceeding with a finance application by conducting a Land Registry search. If the title is unregistered, factor in additional time for the first registration process.

The fee for registering a charge at the Land Registry depends on the transaction value. For a development finance facility of £2,000,000, the registration fee is approximately £270. While this is a relatively minor cost in the context of the overall transaction, the consequences of failing to register the charge correctly and within the priority period can be severe for the lender, which is why solicitors treat this step with great care.

Restrictive covenants are among the most common title issues affecting development sites. A restrictive covenant is a legal obligation imposed on the land, typically by a previous owner, that restricts how the land can be used or developed. Common restrictive covenants include limitations on the type of building that can be erected, restrictions on the number of dwellings, requirements to maintain the land as open space, and prohibitions on specific uses. If a restrictive covenant conflicts with the proposed development, the lender will require the issue to be resolved before completing the facility.

Options for resolving restrictive covenants include obtaining the consent of the person with the benefit of the covenant, which may involve a payment; obtaining restrictive covenant indemnity insurance, which covers the cost of any claim; or applying to the Upper Tribunal for the covenant to be modified or discharged under Section 84 of the Law of Property Act 1925. Indemnity insurance is the most common solution and can be obtained relatively quickly and inexpensively, typically for a one-off premium of £200 to £5,000 depending on the risk profile. However, the insurer will not cover the cost of complying with the covenant if it is enforced, only the financial loss.

Boundary discrepancies are another frequent issue. The Land Registry title plan may not accurately reflect the physical boundaries on site, particularly for older registrations. If the proposed development extends to the boundary of the title, or if a neighbour disputes the boundary, the lender may require a surveyor's report confirming the extent of the developer's ownership. In extreme cases, a boundary dispute can prevent the development finance transaction from completing until the dispute is resolved, either by agreement or through legal proceedings. We have seen boundary disputes add six to twelve months to a project timeline and cost upwards of £25,000 in legal fees.

The charges register of the title records all mortgages and charges registered against the property. Before the development finance lender can register its first legal charge, all existing charges must be discharged. If the developer is purchasing the site with the aid of a bridging loan, that bridging loan must be repaid and the charge discharged simultaneously with the registration of the development finance lender's charge. This is a standard concurrent discharge and registration that solicitors handle routinely.

Restrictions on the proprietorship register can be more problematic. A restriction limits the registered proprietor's ability to deal with the land. Common restrictions include those requiring consent from a third party before the land can be transferred or charged, restrictions entered by a co-owner requiring their consent, and restrictions entered by the Land Registry automatically when the proprietor is a company. The company restriction requires the solicitor to certify that the transaction does not contravene section 40 of the Companies Act 2006, which is a standard certification but must not be overlooked.

Other incumbrances that can affect development finance transactions include notices of home rights under the Family Law Act 1996, which indicate that a spouse or civil partner has a right of occupation; cautions against first registration, which are used to protect interests in unregistered land; and unilateral notices entered by parties claiming an interest in the land. Each of these entries needs to be investigated and, where necessary, removed before the lender will complete. In our experience, early investigation of the title is the single most effective way to avoid delays. We recommend obtaining official copies of the title at the very start of the project and discussing any entries with your solicitor before you even submit your finance application.

The Land Registry title plan defines the extent of the registered title by reference to a red-edged boundary on an Ordnance Survey map. For development finance purposes, it is essential that the title plan accurately reflects the site on which the proposed development will be built. If the development proposals extend beyond the red-edged boundary, for example where a developer intends to build on an adjoining strip of land that they believe they own but which is not included in the registered title, the lender cannot take security over that additional land without it being registered.

Developers acquiring additional land to assemble a development site need to ensure that all parcels are properly registered and, if necessary, consolidated into a single title. The Land Registry can merge multiple titles into one, which simplifies the security documentation for the lender. Alternatively, the lender may take separate charges over each title. The cost of merging titles is modest, typically £40 to £100, but the process takes several weeks and should be initiated well in advance of the anticipated finance completion date.

For developments involving the subdivision of a larger title, such as a developer purchasing part of a farm or estate for residential development, the title must be split and a new title created for the development site. This requires a transfer of part, which is registered at the Land Registry and results in the creation of a new title number for the transferred land. The title plan for the new title must accurately reflect the extent of the development site. Any rights needed over the retained land, such as access rights or service easements, must be granted in the transfer and registered against both titles. These are technical legal requirements that a solicitor experienced in development finance transactions will handle as a matter of course.

The single most impactful step you can take is to obtain official copies of your title register and title plan at the very beginning of the project. Review them with your solicitor, identify any entries that could cause issues, and begin resolving them immediately. This parallel processing means that title issues are being addressed while you are preparing your finance application, obtaining valuations, and negotiating terms. By the time the lender's solicitor is instructed, the title should be clean.

If you are purchasing a site, insist on seeing the seller's title documents before exchanging contracts. This allows you to identify potential issues, such as restrictive covenants, missing easements, or boundary discrepancies, and address them in the purchase contract. A well-drafted purchase contract will require the seller to provide title that is satisfactory to the buyer's lender, giving you leverage to require the seller to resolve any issues that the lender identifies.

Keep your solicitor informed about the development proposals and the finance application timeline. The solicitor needs to understand what the lender will require so that they can anticipate and address issues proactively. A solicitor who knows that the lender requires a first legal charge over a clean title with no adverse entries is better placed to achieve that outcome than one who is not told about the finance requirements until the last minute. For development finance transactions, we recommend instructing a solicitor as soon as you have identified the site, even before you have agreed terms with the lender. This early instruction allows the solicitor to begin title investigation, commission searches, and prepare the legal pack in parallel with the finance application process.