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Handy new checklist for lease extensions (surrender and regrants)

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HM Land Registry has published a handy new checklist for use when handling lease extension applications that take effect as surrender and regrants.

It comes as part of a wide-ranging and determined effort to drive down the number of requests for information (requisitions) we have to send, which cause delays in the registration process and mean extra work for conveyancers.

During the course of a lease there can be times when the landlord and tenant want to change one or more aspects of what was originally agreed. Where such variations mean the existing lease cannot simply be extended by deed – for example, land is added, or the term extended – that lease is deemed to have been surrendered and a completely new one created. This is a surrender and regrant application and follows the usual requirements for registering a dispositionary first lease.

We received 35,000 surrender and regrant applications in 2021/22 – an average of 138 a day – and around 70% of these required at least one requisition.

We recognise this can be a complex and often misunderstood area of land registration, so we’ve created the checklist to help – you’ll find it attached to Practice Guide 28 as a supplement. The checklist pulls together the key elements to consider into a single at-a-glance reference with helpful links to further information across our practice guides.

Four key areas

The checklist focuses on the four key areas that give rise to the most requisitions:

  1. the application form AP1
  2. prescribed clauses
  3. documents lodged or missing
  4. incumbrances on the landlord’s title

Applications are often lodged incorrectly as an update to an existing register. As they are surrender and regrants, in each case we create a new register, which means applications must be submitted as a dispositionary first lease by choosing ‘Lease Extension’ in the portal. (If you are using third-party software (Business Gateway) and unsure how to do this please contact your software supplier.)

As well as this, common issues that lead us to raise requisitions include, but are not limited to:

  • a title referred to in a deed has not been entered in panel 2 of the form AP1
  • incumbrances such as restrictions on the landlord’s title have not been dealt with
  • the term has been extended, but no deed of substituted security has been lodged or a deed of substituted security is lodged that has not been approved by our Commercial Arrangements Section
  • an address for service of the proprietor of the land or charge is required

We anticipate that, in most cases, a simple checklist will help eliminate many such errors and omissions, speeding up the registration process to provide a more efficient, consistent and accurate service for all of our customers. We believe doing what we can to improve the quality of applications will help us achieve these aims while better protecting the integrity of the register.

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  1. Comment by Laurence Mann posted on

    You could get rid of the need for Deeds of Substituted Security altogether now. Since the end of last month, all leases cannot reserve a ground rent. As such, a lease which:

    a. extends the term
    b. does not impose more onerous terms on a tenant
    c.does not reduce the land comprised in the title

    cannot prejudice the security of a lender.

    As such, why not, where there is a conveyancer certificate as to (b) simply carry the charge(s) and any restrictions or other burdens over either to a new title, or retain the title number?

    This would save:
    a. The client the cost of obtaining a Deed.
    b. You the cost of raising requisitions.
    c. Lenders a whole load of admin.
    d. Lawyers loads of time.

    I can't see any reason for not doing this and indeed have suggested it before.

    • Replies to Laurence Mann>

      Comment by Daniel Bradbury posted on

      Hi Laurence

      Thank you for your comment. In general terms we would agree that any changes that simplify these sorts of applications are positive, however in this instance a deed of substituted security would still be required.

      As detailed above, adding land to that originally demised in a lease, or extending the term, automatically brings the existing lease to an end and a new lease is granted. This new lease is required to be registered.

      Any charge on the old leasehold title was entered into based on the terms of the original lease. For this reason, we cannot automatically assume that it was intended to apply to the new leasehold title.

      For us to close the old title, we must therefore either have evidence that the charge has been discharged, or that the security has been transferred to the new title in the form of a deed of substituted security.

      The recent legislation concerning ground rent does not appear to alter this position.

      I hope that helps.

      • Replies to Daniel Bradbury>

        Comment by Laurence Mann posted on

        Dear Daniel

        I am aware of the current position. I am advocating a change!

        • Replies to Laurence Mann>

          Comment by Daniel Bradbury posted on

          Hi Laurence

          Our current practice reflects the legal position developed through the Courts over a number of years. If there was to be a change in the judicial view of these cases we would of course reconsider our practice.

  2. Comment by Alex McRae posted on

    It would be great if the individual who is dealing with the request actually reads the Power of Attorney actually understands it as that is the most frequent requisition I receive back? Where it clearly states who can sign what. Also about the electronic signature of the CEO requisitions in regards to the signature, when there is a facilities letter and it is stamped and signed by an attorney as a true copy of the original?

    • Replies to Alex McRae>

      Comment by Gavin Curry posted on

      Thank you for your comments Alex. We are aware that sometimes we also get things wrong and your comments will be fed back to support our caseworkers.

  3. Comment by Mark Lynch posted on

    I believe your narrative above may be misleading. In the sentence: "Where such variations mean the existing lease cannot simply be extended by deed – for example, land is added or removed, or the term extended or reduced – that lease is deemed to have been surrendered and a completely new one created", I think the reference to "mean the existing lease cannot simply be extended by deed" should be to "cannot legally be carried out by a deed of variation".
    Your current wording could be read as suggesting that a deed of surrender of part takes effect as a surrender and regrant, which I do not believe is correct. It also refers to a lease being "extended" by "removal" and "reduction" which appears contradictory.

    • Replies to Mark Lynch>

      Comment by Gavin Curry posted on

      Hello Mark. Thanks for your comment. We have amended the text to clarify it.

  4. Comment by Ben Mitchell posted on

    I am shocked that the Land Registry is, according to my solicitor, refusing to process lease extension registrations unless the property is being sold. This is totally unacceptable and a derogation of duty by the Land Registry. This needs to be addressed immediately.