Legal Restrictions

1. Acquisition of immovable property by foreign persons/companies.

– Are there any legal restrictions that affect a foreign citizen wishing to purchase an immoveable property? Does nationality play a role at all?

– Are any permits required by a foreign citizen wishing to purchase a real estate property? Are these matters covered by the Land Registry Procedure?

There are no such restrictions.

2. Acquisition of agricultural land: restrictions and limitations.

Are there any legal restrictions that affect a foreign citizen wishing to purchase an agricultural property? Is there any kind of limitation?

– Are any permits required by a foreign citizen wishing to purchase an agricultural property? Are these matters covered by the Land Registry Procedure?

There are no such restrictions.

3. Acquisition of flat property: legal restrictions.

– With regard to the purchase of flat property, are there any legal restrictions, such as approval by other apartment owners or by the management company responsible for the relevant property (stipulated in the statutes for example)? Are these matters covered by the Land Registry Procedure?

There are no restrictions imposed by the general law, but restrictions may be imposed by the lease of the flat.

In England, almost all flats are owned under leasehold titles – the owner of the flat has a long lease, typically for 99 or 125 years. The leasehold title is a legal estate (a real right) and is registered in the Land Registry under a title number of its own. The Land Registry keeps a copy of the lease deed which is treated as part of the register.

The freehold estate for the whole building, out of which the lease is granted, is registered under a separate title, and the existence of the lease is noted on that title. The owner of the freehold (“the landlord”) may typically be:

• the lease owners jointly, or some of them as trustees for them all,
• a management company of which the lease owners are members,
• a management company of which they are not members,
• the builder, or
• an investor.

It is also possible to have a more complicated structure, for example with the freehold owned by the builder or an investor, an intermediate lease owned by a management company, and then the leases of individual flats owned by the persons living in them.

Another different structure, called commonhold, is possible but very rare.

It is usual for the lease to require that the landlord is notified when a flat is transferred. The Land Registry does not investigate whether this has been done.

It is also possible for the lease to provide that the flat cannot be transferred without the approval of the landlord, but that is unusual. Two weaker restrictions are quite common:

• If there is a management company of which the flat owners are members, it is usual for the lease to provide that the flat cannot be transferred unless the owner’s share in the management company is transferred at the same time.
• The lease sometimes requires the purchaser to enter into a direct agreement with the landlord before the transfer takes place.

Where the lease imposes any sort of restriction on transfers, two types of entry in the land register are possible.

Firstly, in all cases, there will be an entry in the land register saying that the lease prohibits or restricts alienation (rule 6(2) of the Land Registration Rules 2003 requires us to make this entry). A person buying the flat must then look at the lease deed to see what the restriction is, and make sure that it is complied with. However, the Land Registry does not check whether he has done so when we register the transfer. This is because failure to comply does not invalidate the transfer – instead, it gives the landlord the right to commence court proceedings to forfeit the lease.

Secondly, it is common (but not necessary) for there to be an entry in the register, called a “restriction”, preventing the registrar registering a transfer (or other disposition) if the relevant provision in the lease has not been complied with. The usual form for this is to require the applicant for registration to produce a certificate from the landlord that the provision has been complied with.

4. Acquisition of immovable property in special areas (such as on the coast or near military-related sites or in national parks, in the mountains, etc.)

Is a permit required for the acquisition of real estate property in special areas (such as on the coast or near military-related sites or in national parks, mountains, etc.)? Is this part of the Land Registry Procedure?

If so, please describe the procedure and name the relevant authority that must grant approval.

Permits are not required. However there are a number of provisions for public bodies to enter into agreements with landowners covering the way that they manage land in sensitive areas.

For example, if “Natural England” or the “Countryside Council for Wales” declares land to be of special scientific interest because of its flora, fauna, geological or physiographical features, they may ask the landowner to enter into an agreement under either:

• Section 7 of the Natural Environment and Rural Communities Act 2006 (if the land falls in England and the agreement is entered into with Natural England); or
• Section 15 of the Countryside Act 1968 (if the land is in Wales and the agreement is entered into with the Countryside Council for Wales); or
• Section 16 of the National Parks and Access to the Countryside Act 1949 (if any part of a landowner’s title comprises a nature reserve, the land is in Wales and the agreement is entered into with the Countryside Council for Wales).

These agreements restrict the way the land can be used and may contain detailed provisions for managing it. They can be expressed to be permanent or to last for a specified number of years.
Similarly, the Forestry Commission (a public body) can enter into a deed requiring a landowner to keep the land as a forest. The landowner is paid for the planting and maintenance of the trees. He also has to promise that he will not cut down the trees after a few years and use the land for something else.

These agreements must be entered in the land register and bind future owners of the land.

See also question 7.

5. Acquisition of immovable property and listed monuments and memorials.

Is a special permit required for the acquisition of monuments or listed buildings?

– If yes, please name the relevant authority that must grant approval.

– Is this part of the Land Registry Procedure?

No special permit is required to acquire them.

Ancient monuments are governed by the Ancient Monuments and Archaeological Areas Act 1979, and listed buildings by the Planning (Listed Buildings and Conservation Areas) Regulations 1990.

It is a criminal offence to damage or demolish them or carry out unauthorised works on them. Both municipalities, and in the case of ancient monuments also national government, have power to enforce this, and to prevent works being carried out. They have compulsory purchase powers (see next question). In the case of an ancient monument, the owner may agree to place it under the “guardianship” of the Minister, the Historic Buildings and Monuments Commission, or a municipality. The guardian is then responsible for maintaining, controlling and managing it.

The Land Registry is not involved in any of these procedures (except compulsory purchase). However, they are registered in the local land charges register (see question X below).

6. Planning Code and legal restrictions (pre-emption right; approval by the municipality or other authorities; splitting a land parcel).

Do your municipalities or the government have a special pre-emption right to property (i.e. a right of first option for the sale of a real estate property)?

Under a recent amendment to the right to buy legislation mentioned in the answer to the next question (section 156A of the Housing Act 1985, added in 2005), the municipality or other former landlord has a right of first refusal if the former tenant (or a successor in title) sells the property within 10 years. A “restriction” is entered in the land register to enforce this. The detailed procedure is governed by the Housing (Right of First Refusal) (England) Regulations 2005 and the Housing (Right of First Refusal) (Wales) Regulations 2005.

– Does land division require a special permit?

More generally, municipalities, central government and some public utility companies have powers of compulsory purchase. This is governed by the Compulsory Purchase Act 1965, and enables them to compel a sale to them of land reasonably required for specified public purposes. Steps in the procedure are covered by entries in the local land charges register (see Question X) and the eventual transfer will be registered by the Land Registry.

– If yes, please name the relevant authority that must grant approval.

Although not directly covered by the question, anyone purchasing, as an investment, a property which has tenants needs to know that:

• Several different pieces of legislation (for example the Leasehold Reform Act 1967 and the Leasehold Reform, Housing and Urban Development Act 1993) give residential tenants holding under long leases powers to compel the sale of the freehold to them, or a right of pre-emption, or a right to an extension of their lease
• The Landlord and Tenant Act 1954 gives business tenants a right to renew their tenancies in certain circumstances.

– Are these matters covered by the Land Registry Procedure?

No permit is required for land division, except to the extent that building works or change of use may be subject to planning controls.

7. Land given by the municipality to domestic inhabitants: legal restrictions?.

– Does your national law have a so-called «local residents model», i.e. the allocation of land by the municipality under the condition that the buyer is obliged to keep the land and not to move away for a specific number of years?

If yes, are there any legal restrictions for the purchaser?

The closest equivalent is the “right to buy” legislation (Part 5 of the Housing Act 1985). This allows residents of social housing, provided by municipalities or by other “social landlords”, the right to buy their house or flat, at a substantial discount on the market value, after they have rented it for a number of years. The discount, or part of it, must be repaid if the resident sells the house or flat within the next five years. This liability is secured by a charge which is entered in the land register. If the purchaser does not ensure that the seller repays it, he must do so himself.

There is an additional restriction where a tenant exercises this “right to buy” in relation to a property in a National Park, a designated “area of outstanding natural beauty”, or certain designated rural areas. The transfer to the tenant may contain a “restrictive covenant” stating that the tenant cannot transfer the property unless he either has the consent of the former landlord or transfers it to someone who has lived or worked for at least the previous 3 years in a designated area (for example, the rural area concerned). A transfer that does not comply with this is void. A “restriction” is entered in the land register preventing registration of a transfer that does not comply. (Section 157, Housing Act 1985).

See also the reply to the previous question.

8. Acquisition of immovable property and tax affairs.

– Must the transfer tax be paid before or after the registration in the land register? Can the Land Registry carry out the real estate property registration without a certification from the tax office?

All transfers or leases of real estate (with a few exceptions) are liable to “Stamp Duty Land Tax”. A tax return must be made and the tax must be paid before the transfer or lease is registered. The tax office issues a certificate that this has been done, which must be sent to the Land Registry with the application for registration. The Land Registry cannot register the transaction without it (Finance Act 2003, section 79(1)).

9. Destination of the land parcel and legal restrictions.

– Does your national law have special legal restrictions that are already apparent from the description of the land parcel?

Not that I can think of.

10. Any other legal, very specific restrictions.

Does your national law have other, very specific legal restrictions that the Land Registry must observe?

A number of important matters are not entered in the land register held by the Land registry, but are entered in the “register of local land charges” which every municipality (that is, county, district or unitary authorities) must keep. This is governed by the Local Land Charges Act 1975. It includes, for example:

  • Planning permissions and refusals and similar matters
  • Some financial charges, for example where a municipality has exercised its powers to repair a dangerous structure, the cost of which must be paid by the landowner
  • Designation as an ancient monument, listed building, area of outstanding natural beauty, etc.
  • Tree Preservation Orders
  • Compulsory purchase
  • Closing Orders (preventing the use of a derelict property).

It is essential to search the local land charges register when buying property or taking a mortgage over it. It is also usual to make other related enquiries of the municipality, covering such matters as drainage, public rights of way, plans affecting neighbouring properties etc, and there is a standard form for doing so.

Matters entered in a local land charges register are “overriding interests” for land registration purposes. They bind a purchaser of the land even though they are not mentioned in the land register.

– If so, please describe the legal restrictions and their impact on the Land Registry procedure.

 

Some land is “common land”, which is a relic of the feudal system. As well as the fields which were cultivated, a medieval village typically had areas which the villagers used in common for grazing their animals. Many such areas survive and special rules apply to them: it is illegal to build on them or to enclose them, and certain people may retain rights of grazing on them. In practice, they are often used as public open spaces for recreation. Some are now in urban areas (for example, Wimbledon Common in London). The land itself may be publicly or privately owned. Very similar rules apply to “town or village greens” which are used as public open spaces.

Municipalities must keep a register of all common land and town or village greens in their area, and of the grazing and other rights claimed over them (now governed by the Commons Act 2006). This register is conclusive. Matters in it bind the landowner even if they are not recorded in the land register. It is routine to search this register if acquiring or taking a mortgage over open land which might be included in it.