Do you own a home in Scotland? Thinking of remortgaging or perhaps taking out a loan against your mortgage for home improvements or the like? Then you’ll need to know that the way land and property deeds are officially registered is changing.
In 2012, the Scottish parliament passed the Land Registration etc (Scotland) Act, designed to enable an efficient and effective system for recording the ownership of land and property in Scotland.
The former was closed to ‘standard securities’ in April this year, while the latter has been in operation since 1981. So if you bought your property after then, it’s almost certainly registered on it. And once it’s on there, it stays on there.
The aim is to eventually transfer all land and property titles from the first to the second register, creating a better picture of who owns what in Scotland, and to hold it on one, digitalised, publicly accessible map.
So what’s the issue?
The Scottish government wants to speed up this transfer, so has added on another trigger point to move new securities from one register to the other.
This means that if you ‘add a new security’ through remortgaging or additional borrowing with a new lender, you’ll need to make an application to move your property title from the Sasines to the Land Register. This is because new securities, with a different lender than before, can no longer be added to the old Sasines register under the new act.
However, if you remortgage or take out additional lending with your current lender, you won’t need to move your title over and would only have to pay the standard security fee, or administration charge, of £60.
What are the costs?
This is where it gets really complicated… As stated earlier, the standard security fee for registering a title is £60. This goes to the Registers of Scotland [ROS], and is usually paid through your mortgage lender, solicitor or conveyancer. You’ll also have to pay a registration fee based on the value of your property if you’re moving a property onto the Land Register through a routine trigger, such as a sale.
The new trigger is expected to mainly affect residential properties (the ROS estimates that between 4,000-5,000 people will be affected each year), and for these the costs is expected to be fairly low, as in most cases, there will only be one property title deed to examine.
But with more complex cases, say if the boundaries to your property are unclear, or you need access to reports to make your application for new or additional borrowing, you may be faced with higher, and potentially unexpected, costs as a result of the additional work required to submit an acceptable ‘plan’ of the property.
The cost of this is dependent on the complexity of the plan required, and on the fees charged by different suppliers, but may run into thousands. As an indication of how much you’ll be looking at, the ROS’ own plan drawing service costs from £90 for a simple property to £785 for a more complex one.
However, you’ll only really know how much you’re liable for once you find out how complicated the plan is. There are also likely to be additional legal costs associated with this process, as it’s usually a solicitor who submits registration applications on behalf of their clients.
Transparency is the issue
As new borrowing is a new trigger point, we at Which? keen that homeowners are made aware of the changes and potential costs they may be faced with if they go down that route. We also want to make sure they aren’t overcharged or exploited as part of the process. Your solicitor, conveyancer or mortgage adviser may be able to tell you early on about the existence of the new costs, but may not be able to say what exactly the costs will be for your particular circumstances.
We spoke to the Council of Mortgage Lenders, who we’re working with to ensure transparency of mortgage fees, and it said it would be up to individual lenders as to whether they passed on any additional legal costs incurred to their customers. It also said that it encourages members to be as transparent as possible about the potential costs their customers face.
We also spoke to the Law Society of Scotland, but it is yet to clarify its approach.
If you have more questions on costs, check out the ROS FAQs.
Have you discovered at the last minute that you’ve had to draw up a plan? Has it cost you more than you expected?