Freeths Real Estate Law Blog: The importance of registering leases – Why should landlords care?
A lease for a term of more than seven years must be registered at the Land Registry. It is the tenant’s responsibility to complete the registration. Failure to register the lease within the relevant time period means it is not a valid legal lease and only takes effect as an equitable lease, or possibly a legal periodic tenancy. This can leave tenants in a vulnerable position…
…but what is the impact on the landlord?
- The landlord may not be able to recover unpaid rent from any guarantor if the tenant fails to pay; in fact, the guarantor will not be on the hook for any liabilities;
- If the landlord wants to sell the property, there are likely to be delays as a well-advised buyer will insist on the position being regularised before completion;
- The landlord may also find it difficult to obtain finance on the property that is subject to the lease, due to the vulnerability of the income stream and the impact on value.
What can landlords do?
The lease should include an obligation on the tenant to apply to register the lease within a certain timescale, coupled with an obligation to provide the landlord’s solicitor with up to date official copies once the registration is complete. These covenants will not eliminate the risk, but should minimise it by ensuring the registration requirement is not overlooked and may also give the landlord other remedies.
What if the lease is not registered but should be?
The Land Registry will only register the copy of the lease signed by the landlord, which is normally sent to the tenant on completion. Therefore the landlord would normally be unable to apply to register the lease itself.
Sometimes, the Land Registry will allow for late registration (assuming there are still at least seven years of the term left to run), but it has complete discretion over this, so registration is not guaranteed. Where the Land Registry will not allow late registration, the only way the position can be regularised is for the lease to be granted again, and this may have other consequences for the tenant.
If you realise that a lease you have granted has not been registered, contact a member of our Real Estate team for further advice on assessing and minimising the impact on the value of your investment.
The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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