The Land Registry is changing its practice at the end of June on registration of title where a tenant enlarges its interest under section 153 LPA 1925. Subject to the conditions laid down by section 153, a long lessee (i.e. a tenant holding a lease granted for a term of not less than three hundred years) enjoys the right to enlarge its lease into a freehold estate, simply by executing a deed unilaterally. Provided the long lease does not include a forfeiture clause for breach of covenant, and no rent is reserved, or the rent is merely a peppercorn, the tenant enjoys the right to enlarge to a fee simple immediately – i.e. from day one of the lease. Where a rent is reserved, the tenant under such a lease enjoys the right to enlarge once the rent has ceased to be payable – i.e. where the lease reserves a rent “which subsequently has been released or has become barred by lapse of time, or has in any other way ceased to be payable”.
At present, on enlargement, if the superior freehold title is a registered title, the Land Registry closes that title as if it had been extinguished by the process. Its new practice will be not to close the reversioner’s title, but to keep it open, and to make appropriate entries on both the landlord’s and the tenant’s newly enlarged freehold titles so that it is clear that enlargement has taken place. What this means is that there will be two freehold titles on the same property – an odd concept. Land Registry’s view is that the tenant who enlarges is acquiring a new fee simple, but not the reversioner’s fee simple, and as there is no clear indication at law that the reversioner’s fee simple is extinguished, the title will be kept open. Of course, both titles would be revealed on searches of the index map, and the entries that would be made on both titles to record the enlargement would be sufficient to inform anyone inspecting either register to be alerted to it. So, whilst the concept is odd, a person inspecting the register should be fully aware.
The Land Registry’s website does not yet contain details of this change of practice, and it does not appear to be conducting any form of consultation on the change. Instead, it is simply writing to its “principal stakeholders” and to individuals who have contacted the Land Registry, to invite comments by 29 June 2012. If you would like to make comments, you will need to be pro-active.