The Levelling Up and Regeneration Act 2023 (the Act), which came into force on 26 October 2023, provided new legislation dealing with a raft of real estate matters.
One area of change which will be particularly impactful on the real estate market is the introduction of powers for the Government to require the disclosure of a huge amount of information about interests in and dealings with land, yet another weapon in the UK Government’s arsenal in its battle to make ownership and control of land in the UK more transparent. These powers are contained within Part 11 of the Act and have the potential to be applied retrospectively, meaning transactions completed before the Act came into force could be caught.
Part 11 of the Act gives the Secretary of State powers to make regulations that would require certain information about interests in or dealings with land to be disclosed for one of the “permitted purposes”. Future regulations will set out the detail of how the disclosure obligation will work in practice, and it is not yet clear when those regulations will be brought into force. However, the Act already gives us detail of the circumstances under which disclosure will be required.
The permitted purposes under the Act are, briefly, as follows:
- Beneficial Ownership Purpose – information will fall within this purpose if it would be useful to identify the beneficial ownership of the land in question and understand their relationship to the land which they own or control.
- Contractual Control Purpose – information is within this purpose if it would be useful to identify anyone with relevant contractual rights, including the person/ entity who holds them. The relevant contractual rights include those that arise under a contract and those that relate to the development or use of land.
- National Security Purpose – information falls within this purpose if a threat to national security arises in relation to the land including, for example, its location.
What kind of information will need to be disclosed?
If the relevant transaction or land falls within one of the above purposes, a very wide range of information can be required to be disclosed. It includes “transactional information” in relation to contracts and other agreements that create, transfer, alter or extinguish interests and rights in land. This will include the parties to the transaction, the terms including the consideration, details of the parties’ professional advisers and the source of any money or other consideration given. Copies of the transactional documents may have to be disclosed.
This section of the Act will be of particular interest to developers, especially as transactional information in relation to options or even agreements for lease would be caught. Previously much of this information would have remained confidential.
Section 219(8) of the Act provides that the forthcoming regulations may relate to things done or arising before it came into force on 26 October 2023, thereby giving the Act potentially retrospective effect.
Will the information be made public?
There is currently limited information in the Act as to whether the information will be made public. Part 11 states that regulations may provide for the sharing of information with those exercising functions of a public nature and for the publication of information.
Pending the publication of regulations, it is not clear whether anything can be redacted from this information. This will be of concern to those who wish to keep private the commercially sensitive information in their agreements and contracts.
Enforcing the new provisions
Once the regulations come into effect, registration at HM Land Registry may be prevented if the requested information is not provided. As a result of this, owners could not deal with their land.
In addition, section 225 of the Act makes it clear that if false or misleading information is provided knowingly or recklessly, or a person fails without reasonable excuse to provide the requested information at all, they will be committing a criminal offence.
What next?
These provisions are in their infancy, but their potential effects cannot be understated. They will prevent developers and those who deal with land from keeping certain transactional information confidential. We will need to wait for the regulations to come into force and only then will we be able to assess the full extent of the disclosure obligations. In the meantime, developers and other entities that deal in land should bear these obligations in mind when negotiating transactions.
This article was co-authored by Emma Worthington.