Registering Your Lease
As a tenant, when you sign on the dotted line and complete a lease, independent of solicitors, you may think that is the ‘job done’ It’s signed, it’s dated however, is it registered?
If the lease is for a term for seven years or more, it must be registered at the Land Registry according to statute.
This mandatory registration must happen within two months of completion of the lease and the relevant forms and fee must accompany the application.
Registration of your lease is impetrative as, not only does it record your ownership, but it also evidences your legal interest. Failure to register will leave you in a vulnerable position. Your lease will not be ‘good against the world’ and is only enforceable as a contract between you and the Landlord.
This can cause problems when you are looking to sell your leasehold premises as you will not have legal title to pass to a buyer.
Application can still be made to the Land Registry after two months, however they are unlikely to look kindly on late applications and can refuse to register the lease. This would mean you would have to go back to your Landlord and request a new lease, who is under no obligation to grant the same and, could request that their legal fees be paid by you.
In addition, failure to register your lease, most likely also means you have not thought to notify HMRC of the transaction for stamp duty land tax purposes. The grant of the lease could have triggered a tax liability and therefore HMRC needs to be notified and paid, within 30 days of completion. If you fail to do so, then you will be subject to an automatic penalty, a hefty fine plus interest from the date of completion, on top of tax. Even if there is no liability payable, notification to HMRC could still be necessary and a fine could be payable.
The rule also applies to transfers of already registered leases. For instance, if you were ‘purchasing’ a leasehold premises off a tenant, then this transfer of the already registered lease, into your name, must be registered in order to note your ownership.
My advice – instruct a solicitor who can deal with this for you, either for the whole transaction or just the post completion matters to ensure your position is protected.
Aimee Ellery. Solicitor, Commercial Department.