Christian Faes, CEO and co-founder of LendInvest, considers the privatisation of the Land Registry. This commentary was first published in City AM, London’s leading business daily newspaper.
It not uncommon to read about government policy decisions and count yourself lucky that you’re not the one making them. But when it comes to the current debate over whether to privatise the Land Registry, while a good idea on the surface, rejecting this proposal should be a no-brainer.
It may not be a conundrum on the scale of Brexit or junior doctors’ contracts, but the debate surrounding the Land Registry tells us a lot about the country’s relationship with privatisation, competition and monopolies.
The Land Registry is 150 years old and in that time has enjoyed a monopoly that only government-sponsored bodies have the luxury to hold. It’s also profitable, contributing £37m last year to government coffers according to the New Economics Foundation. But in a push to drive £5bn of asset sales by 2020, the government is considering selling the Registry for a rumoured £1.2bn. Private investors are naturally circling.
Advocates of privatisation make a compelling case: private ownership can be an incredible driving force for innovation. And anyone who has bought a property knows the limitations of the Land Registry’s technological capabilities. Leases and plans that have been faxed a number of times and then photocopied a few times more serve as grainy but official documents. Others are served to you or your mortgage lender in formats that can’t be read by standard software tools, meaning time-intensive and costly data extractions.
It would be unfair to say the Registry hasn’t innovated. It certainly isn’t as paper-intensive as it was. But in a world where technology has put so much of our lives in fast-forward, dealing with the Registry’s outmoded online tools can feel archaic and hair-pullingly frustrating.
As a short-term mortgage lender, we feel the speed (or lack of) at which the Registry works most keenly. It can hold us back from critical underwriting decisions, delaying borrowers’ urgent applications for days or weeks.
Injecting private investment into the Registry could prove transformational. In the right hands and with a commercial outlook, it could develop tools that mean searches and registrations take a fraction of the time to fulfil with fewer margins for error.
A privatised Land Registry would be subject to competing entities too, each seeking market share of the country’s land ownership data. Stiff competition breeds fast innovation.
Yet opponents are making themselves heard, with the Competition and Markets Authority (CMA) in particular speaking up, and their arguments are gaining traction.
We mustn’t compare the Registry to Royal Mail or RBS, where privatisation is the right end-goal: a mission to aspire to with a focus on margins. This misidentifies what the Land Registry is, and what we stand to lose if government cedes control.
The Land Registry is a repository for data and has always had a monopoly on the information it controls. It doesn’t collect it for its own interests, but to ensure the property market in this country can operate and function.
It might feel out-dated and be a headache to work with at times, but the Registry is packed full of integrity. Handing access to it to private hands and encouraging it to compete with new market entrants would drive up costs and drive down its ability to be impartial. Or as the CMA neatly puts it: “the introduction of a profit motive” will “sharpen” the risk of limiting access to high-quality Registry data at low prices.
Paradoxically, opening up competition through privatisation could be anti-competitive and stem the innovation that privatisation seeks to spur on.
Controlling land ownership is a central role of government, and the Land Registry is its single, sole depository of land ownership information. To some, selling the Registry would be like selling HMRC or the General Register Office. We’d never hand over birth, deaths and tax registers to private entities with their own ideas on governance. Why treat land ownership differently?