What are your obligations when registering a lease?
There are certain circumstances where it is necessary to register a lease at the Land Registry; this includes the following situations:-
- The lease has a term of more than seven years
- The assignment of an existing lease with more than seven years to run
- The grant of a lease that takes effect more than three months after the grant
The obligation to register the lease usually falls on the tenant and such an application for registration must be made within two months of the date of the lease. The lease is there to help protect all parties and if the tenant fails to register a lease, it can leave both in a vulnerable position.
What are the consequences of non-registration of leases?
There are various consequences if a tenant fails to register a lease at HM Land Registry. These consequences include:
- The lease will have no effect in law. However, there is an argument that there is an equitable lease. An equitable lease does not have the same security as a registered lease. As a result, any Landlord or Tenant will find it difficult to dispose of their interests in the property, given the insecure position.
- There is also a risk that a landlord may be unable to recover any unpaid rent from the guarantor in the event that the tenant fails to pay.
- If the landlord wants to sell the property, delays are inevitable if the buyer wants the position to be regularised before they complete.
- The landlord may not be able to gain finance on the property as there is no evidence of a steady income stream.
What should a tenant/landlord do to avoid this?
Following completion of the lease, the tenant should ensure that they promptly submit their application to the Land Registry to register the lease.
Any landlord should ensure that the lease puts the tenant under an obligation to register the lease and forward a copy of the title document following registration. It is important for all landlords to make enquiries with tenants to ensure that the lease has been registered accordingly.