Who owns that house?

Have you ever wondered who owned that empty house at the bottom of your road? Or been curious about just how much your new neighbours paid for their home? Did they really pay cash, as the rumours go, or have they got a mortgage? Well, now you can find out. It takes about two minutes and costs £2. And you can do it from the comfort of your own computer. The Land Registry of England and Wales has gone online. And of course, that means your neighbours, your friends – even your daughter’s boyfriend – can just as easily find out all about your home. If you have not got a computer, then there is a postal service, though it takes longer and costs twice as much. In fact, as the Land Registry is at pains to point out, that service has been going since compulsory land registration covered the whole of England and Wales in 1990.

So just what can you find out? You get about four brief pages of information, They tell you the Land Registry Title Number for the property, when it was first registered, the date it last changed hands, who owns it now, and, IF IT CHANGED HANDS ON 1 April 2000 or later, what they paid. Then there is information about what are called ‘charges’ against the property. Most common of course is a mortgage. Although the amount of the mortgage is not given, the register records if there is one and who the lender is. It will also show any other mortgages, such as loans secured against the property, or any other individuals or companies who have a right to the value of the home in certain circumstances – for example a creditor such as a local authority, the courts, or an ex-spouse could all be listed if they have a right to recover money they are owed from the proceeds of a sale. Finally it will show any covenants which restrict the use of the land or any private rights of way across the property, for example if someone has the right to cross the property to reach their own land, or has the right to access pipes or other services under the land. However, public rights of way are not shown.

The information does not at this stage include the plan which identifies the boundaries of the land – that is expected to be added next year. Meanwhile you can get a printed copy of that if you wish.

History
Not all land is registered. Property which has not changed hands since land registration became compulsory in that part of the country will not yet be on the register. It will go on the register next time it changes hands. And the Land Registry has a plan to register all land in England and Wales by 2012 whether it changes hands or not. They will be writing to the owners of all unregistered land over the next four years. After that they will consider compulsion. But until land is registered then it is not on the register and you cannot find out about it from the Land Registry.

Unfortunately the Land Registry does not keep historical data about land ownership. So you cannot use the information to trace the history of your home. As the registration no longer depends on bits of paper to establish your ‘title’ to the land, there is a real danger that much historic data will be lost forever.

Scotland and Northern Ireland
Similar facilities are available in Scotland but searches can also be done on someone’s name to find out what property an individual owns. The cost is either £2 or £4 + VAT depending on which register is searched. Electronic searches are also possible in Northern Ireland, also for £2.

NEW PROPERTY TAX
Stamp Duty was introduced in Britain in 1694 to help pay for the war with France. Today most people come across it when they buy a home. But from 1 December 2003 this ancient levy is being replaced. The new Stamp Duty Land Tax may not sound much different, and initially it is not. The tax is still charged in the same peculiar way and there is no change in the rates – at least for private residential property. But by replacing the old Stamp Duty – and separating the tax on buying a home from the tax on buying and selling shares – the Chancellor could be laying down the foundations for a bigger and permanent tax charged every time we move home.

The rates of Stamp Duty Land Tax vary according to the price of the property you buy (see table). The odd thing about it is that once you cross one of the thresholds, the rate of tax is charged on the whole price of your new home. So if you buy your home for £60,000 no tax is charged. But if you buy it for £60,001 then the 1% rate is applied to the whole lot. So tax on a £60,000 home is zero but the tax on a £60,001 home is £605 (SDLT is always rounded up to the next £5). The effect is worse for more expensive property. A home which costs £250,000 is taxed at 1% or £2500. But if it is £1 more expensive the whole lot is taxed at 3% which is £7505. So you pay an extra £5005 tax for an extra £1 on the price!

Curtains
If you are buying property just above one of the thresholds, the temptation is to keep the price down below it. For example if a house costs £254,900 you might try to pay £250,000 for the house and £4900 for the carpets and curtains. As long as the price for those is reasonable then the deal is a lawful way to reduce the tax. But if you said you were paying £49,000 for a fitted lounge carpet and a pair of bathroom curtains then the Inland Revenue would quite reasonably say that was not allowed.

In the past there were few checks on the amount paid for fixtures and fittings – or chattels as the Inland Revenue calls them. But from 1 December you will have to declare not only the price you paid the property but any additional money you paid for extra items and what they were. That will make it much easier for the Inland Revenue to check that what you are paying is reasonable. It is drawing up a list of what is or is not a chattel – carpets always are, fitted kitchens never are, sheds may be – which should be ready for the start of the new tax on 1 December. And if you break the rules you could face stiff penalties.

Postcode lottery
One way to save money on Stamp Duty Land Tax is to check the postcode of the property you are buying. In many areas of the country which are designated ‘disadvantaged’ the £60,000 threshold is raised to £150,000. So if you are buying a property worth between £60,000 and £150,000 in one of those areas you could pay no SDLT and save yourself up to £1500. You can check which postcodes are in areas covered by the ‘disadvantaged’ area rules on the Inland Revenue website – or call into any Inland Revenue enquiry office. And you can reclaim any overpaid tax in the past – the exemption began in November 2001.

Black ink
People buying property after 1 December will not notice much difference in the tax – though the form will change – it must be signed in black ink and a national insurance number will always be required. Solicitors will still collect the tax and pass it on to the Inland Revenue. But the onus is now on the buyer to make sure the tax is correct and even after it paid the Revenue can launch an enquiry under its ‘process now, check later’ regime. Solicitors warn that costs may rise as they have to explain the new obligations to buyers and collect more information.

Revenue raised
Now that the average price of a home is £142,000, SDLT is due on most homes that change hands and it is no surprise that the tax brings in a lot more money for the Chancellor. When Labour came to power it was charged at a flat rate of 1% on all property sold for more than £60,000 and the tax raised £675 million a year. But in his first Budget Gordon Brown introduced the three bands and then raised the tax again in 1998 and 2000 to reach its present level. Despite property prices rising, the thresholds have not been changed and last year the tax brought in £3,600 million, more than five times the amount it raised in the year before Labour came to power and more than twelve times what it raised ten years ago.

There has been considerable speculation that having renamed it, the Chancellor will now change SDLT. One obvious option is to make it fairer and get rid of the sudden increase in the tax at £60,000, £250,000, and £500,000. But that could be expensive. A proposal by Liberal Democrat MP David Laws to do just that with bands of 0% under £100,000, and a sliding scale up to 5% on the cost over £750,000 would cost the Government more than £1 billion in lost revenue.

It seems more likely that he will make changes to raise extra money. We will know more shortly when the Chancellor reveals his Pre Budget Report early in December.

More information
Online searches in England and Wales.
Search Registers of Scotland
Search Land Registers of Northern Ireland
Details on SDLT and the postcode search of ‘disadvantaged’ areas.

December 2003

e-mail Paul Lewis on paul@paullewis.co.uk