The Land Registry reduce fees but charges remain high
Edward Freeman discusses the reduction in registration fees and argues the organisation should do much more to make fees reasonable.
August 14, 2012
The Land Registry recently announced, with much fanfare, the new Land Registration Fee Order, which will come into effect on 22 October 2012. This will reduce the charges for both registering a property and the information services the organisation provides. The Land Registry is a government agency but it has to fund itself through the fees it charges. These fees are based on the volume of applications received, the value of property and its own overheads. This announcement is certainly welcome as these fees can run into the hundreds of pounds to register a property, when the actual service provided is usually nothing more than inputting details into the Land Registry’s database. Since 1990 it has been compulsory to register all property transactions with the Registry, so it is an issue that impacts on all homeowners.
However, how significant are these reductions? The Land Registry’s Finance Director, Heather Foster, insists that by lowering their fees the organisation is “reducing property market transaction costs and so assisting with economic growth.” Quite a bold claim. The stagnant housing market is certainly a contributor to the seemingly relentless recession, and any fillip which adds impetus to this sector should be applauded. Yet the savings the Registry is passing onto its customers are paltry. Fees for registering a property (called scale fees) have been reduced by just £10 across the board. As a result the fee for registering the average priced property will be cut from £200 to a hardly more reasonable £190. When you get to the top end fees the reduction is barely more than 1%. The charge to register a house worth more than £1 million has been cut from £920 to £910.
The explicit implication that such small reductions in fees will somehow stimulate the economy is misleading and distracts from the fact that the Land registry’s fees are too high for the service the organisation provides. Foster is seriously trying to claim that prospective house buyers will be encouraged to go ahead with the biggest financial transaction of their lives because they now have to spend a few pounds less on registration fees. This is plainly unrealistic.
Rather than making outlandish claims the Land Registry should continue to seek further efficiency savings and which can be used to ensure the fees it charges are reasonable.