It’s reported that around 15% of property in the UK is unregistered. Why so many? Surprisingly, it only became compulsory to register property with Land Registry in 1990. As a result, millions of homeowners may find themselves in the situation of trying to sell an unregistered property, especially if they have resided in the same home for more than 34 years.
In this blog, Open Property Group answers the most common questions associated with an unregistered property and explains why it could be problematic if you need to sell a home quickly.
A. An unregistered property is a dwelling that has not been registered with the HM Land Registry. Therefore, there is no electronic record of who owns the property and anyone who may benefit from the dwelling.
A. The homeowner will have to rely on paper deeds or historical documents to prove that they are the property’s owner. Sometimes these are lodged with a mortgage lender or solicitor but more frequently, they are stuffed in filing cabinets and bureaus in private residences. The matter is complicated if the paperwork is lost, damaged or destroyed.
A. If there is no registered record of ownership, there is a chance a third party may emerge and lay claim to the land and its property. This can be true if there is missing paperwork, records that have not been updated or forgeries. Unregistered properties can also be more susceptible to illegal squatting and property fraud.
A. Unregistered properties can often be bought for a below market price as they carry risk. Once registered with Land Registry, the property can increase in value but the buyer will need to be confident they have the time and skill to prove ownership.
It may not be evident if a property is unregistered when looking at listings, so it’s wise to check with Land Registry before making an offer. Buyers should also check that their chosen solicitor has the knowledge and/or time to take on an unregistered property purchase.
A. It is possible to sell an unregistered property as there is no formal requirement to register it before it is sold (this can be left to the purchaser). Bear in mind, however, a mortgage lender may refuse to lend on an unregistered property, so the purchasing audience may be restricted to cash house buyers.
A. Having the right documents will be the biggest hurdle. Normally, the buyer’s solicitor will want physical evidence of ownership before the purchase can proceed.
This can include an ‘epitome of title’, which demonstrates how the property came into someone’s possession, and by substantiating a good ‘root of title’ - a document that shows an unbroken and unfettered chain of ownership dating back at least 15 years (although the current seller doesn’t have to have owned the property for those 15 years). Legally, this is known as a deducing title.
A solicitor will usually feel comfortable that an unchallenged ownership over a 15 year period is a safe bet but they may also require a ST3 form - ‘a statement of truth’ - which proves the seller lives in the property.
A. It can be hard to prove if there are any rights, restrictions and debts affecting an unregistered property. Therefore, detrimental rights of way and restrictive covenants may be unclear. Not being able to provide this information is one of the things that might stop your home from selling.
A potential buyer may only want to proceed if an unregistered property is formally registered with Land Registry before the sale, which could be an issue if paper deeds or historical documents are not available.
Even if physical documents are available, the registration process can take up to 18 months - problematic if you need to sell your house quickly. If there is any doubt about ownership, Land Registry may only grant a ‘possessory title’ rather than ‘absolute title’. With a possessory title, a challenge of ownership can still be mounted, making it a less attractive purchase.
A. Not many homes stay unregistered in perpetuity. The Land Registration Act of 2002 says registration becomes compulsory when the ownership of an unregistered property changes hands (buying, selling, gifting or inheriting), when the property is leased to a tenant for more than seven years and when the property is mortgaged.
If you’d like to find out if a property you own is unregistered, we can establish that on your behalf. If it is unregistered, Open Property Group can advise you of your next step, which can include selling to us without having to go through the hassle of registering it with Land Registry. We will also make cash offers on properties where there are missing documents and possessory titles. Contact us to discuss.
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