Land Registry fees: A guide for homeowners

Whether you’re buying or selling property, Land Registry fees are a crucial part of the process.

Land Registry fees are mandatory payments for registering property changes in the public record, ensuring your ownership is both legally recognised and protected.

This blog explains what these fees are, how they’re determined, and what they mean for your property transactions, without the unnecessary details.

Land registry fees: The key takeaways

• Land Registry fees are legal charges for recording property ownership changes and transactions in the HM Land Registry. They're important for maintaining the property market's integrity.
• There are two main types of fees: Scale 1, which is based on property value, and Scale 2, which varies depending on the transaction, with electronic applications often incurring lower fees.
• Land Registry fee calculations are influenced by the following factors: the property’s value, the method of registration (with discounts for electronic filings), and the specific type of transaction carried out.

What do these fees cover?

Whenever you’re about to become a homeowner, Land Registry fees come into play. They're mostly a means of ensuring order.

While these fees are definitely not the best part of purchasing a property, they’re a standard part of property ownership. They cover the costs of:

• Legally conducting a property transaction
• Making changes to the title documents
• Cementing your ownership in the public record

Land Registry fees are set out by the Land Registration Fee Order 2021, which has been keeping them VAT-free since January 2022.

These fees ensure that when you buy a property, your name is etched into the legal framework, and your rights as the owner are firmly established. They're not just about updating records - they’re about protecting your investment and giving you peace of mind.

To surmise, Land Registry fees keep the wheels of property ownership turning, ensuring that every sale, purchase, or transfer is properly documented and recognised.

What's the point of HM Land Registry?

At the centre of the property world lies HM Land Registry, the cornerstone of the property market in England and Wales.

The Land Registry is sort of like the grand library of properties, holding detailed records on every registered property across the UK. Conveyancers, solicitors and mortgage lenders rely on this vast repository of information to:

• Verify ownership of a property
• Check for any restrictions or charges on a property
• Conduct property searches for due diligence purposes
• Provide evidence of ownership for legal purposes
• Ensure that every transaction is accurately reflected

The Land Registry plays a crucial role in maintaining transparency and trust in the property market.

Types of Land Registry fees

Not all Land Registry fees are created equal.

There are two main types: Scale 1 and Scale 2 fees. Scale 1 fees are tied to the property’s value, like how the price of a car depends on its make and model.

Scale 2 fees on the other hand, are tied to a variety of transaction types, such as:

• Partial transfers of registered titles
• Transfers of leasehold titles
• Transfers of mortgage titles
• Transfers of easements
• Transfers of caveats

Like ordering from a menu, every transaction has a price tag, influenced by the specifics of the deal.

Scale 1 fees

Scale 1 fees are based on the VAT-inclusive price or rent of the property involved in the transaction. The higher the value of the property, the more you pay.

There's a twist though. If you’re buying up multiple plots of land from different owners, each parcel incurs its own Scale 1 fee - even if they’re all part of a single transfer. And for those dealing with both registered and unregistered land, separate forms and fees based on the apportioned value are necessary... which means it's important to fill out the correct form.

Scale 2 fees

When it comes to Scale 2 fees, these fees are applied to certain transactions that don’t affect the whole registered title and are accessed via HM Land Registry’s portal or Business Gateway.

Transactions such as transfers of registered estates without monetary consideration fall under this category. The details of the transaction tailor the fee to fit the situation.

Special considerations under Scale 2 fees also apply to transfers by court orders related to family law acts. And when multiple charges are involved, like securing a single debt, a separate fee for each document submitted together is incurred.

The fee for inspecting a register or title plan is a modest** £7** by post, but only £3 each through the portal or Business Gateway, showcasing the cost benefits of going digital.

Fee calculation factors

When it comes to calculating your Land Registry fees, the property’s value plays a big role, with fees varying across different price brackets. Reduced fees are also up for grabs for those who choose to submit their applications through Business e-services like the portal and Business Gateway.

In essence, the property’s cost and the method of registration, especially for unregistered properties, are the central factors that make up the final fee.

1. Property value

Your property's value makes up the main part of the fee. Land Registry fees are scaled to match the property’s price tag, escalating as the value of the property increases.

For Scale 1 fees, the Land Registry has set up different brackets, starting from properties valued at £80,000 up to £1,000,001. It’s a graduated scale, carefully designed to ensure that the fees are proportionate to your property’s worth.

In cases where the property’s value is a bit of a grey area, the Land Registry is flexible. They allow a statement of value from the applicant or their legal representative to assess the appropriate fee.

This means that if you’re ever unsure about how much your property is worth, there’s a process in place to help you figure it out.

2. Registration method

The method you choose to register your property can make a notable difference in the fees you pay. In a digital age, HM Land Registry incentivises electronic applications by offering a 50% reduction for submissions through their portal compared to postal applications.

It’s like choosing between a standard delivery and express shipping – the online route is not only faster but also lighter on the wallet.

This reduced fee for online registration is a nod to efficiency and accessibility, although it’s typically reserved for those in the conveyancing profession. So, if you’re working with a solicitor or conveyancer, it’s worth asking if they can process your registration electronically to capitalise on these savings.

3. Transaction type

The type of transaction you’re involved in also plays a primary role in determining your Land Registry fees. Whether it’s the registration of a new lease, a transfer, or the surrender that affects part of a registered title, each type of transaction is assessed under Scale 1 fees.

The fee can vary depending on whether the transaction encompasses the entire registered title or just a portion of it, as well as if it’s a voluntary first registration.

For transactions like shares and transfers of registered estates not involving money, the fees are based on the value of the estate minus any continuing registered charge.

Common transactions and associated fees

Let’s talk about some real-life scenarios and the Land Registry fees that come with them. Common transactions like first registrations, transfers of registered land for money, leases, and surrenders each have their own fee scales based on the property value or rent.

For example, if you’re purchasing a freehold property worth £250,000, you’re looking at roughly £330 in Land Registry fees for a postal payment, and about half that for an online payment.

When it comes to property transfers involving mortgages, the fee is a bit of a balancing act. If an existing mortgage is being repaid and a new one is taken out, the fee is calculated by subtracting the new mortgage amount from the property’s full value, halving the remainder, and then assessing it under Scale 2.

And if the property transfer involves unequal shares with a new mortgage, the fee is determined by finding the value of the share being transferred and assessing it under Scale 2.

For those gifting a property with shared ownership and an outstanding mortgage, the fee is calculated by dividing the total property value by the number of shares after deducting the mortgage amount.

First-time registrations

First registrations are like the maiden voyage of a ship – it’s the first time the house is officially recorded in the Land Registry’s database.

The fee for first registrations is based on the price paid or value of the property if the application is made within a year of an open market sale, or on the full open market value of the property. For those dealing with transactions involving 20 or more units, such as the registration of a large area of land worth £1.2 million, a Large Scale Application fee applies.

If you’re opting for a voluntary first registration and submitting your application electronically, you get a minimum 25% discount on Scale 1 fees. Just keep in mind that an extra fee of £40 may be required for property inspections necessary for first registrations... but if the inspection doesn’t happen, you’ll get that money back.

And for those dealing with the first registration of a rent charge, the fee is a flat £40.

Transfers of registered land

Transferring ownership of registered land is a common transaction that involves passing the baton of property ownership during a sale. The fees associated with these transfers are a reflection of the value of the property and the complexity of the transaction.

Like transferring the title of a car – you want to make sure everything is documented correctly so the new owner can take the wheel.

Paying Land Registry fees

When it’s time to settle up with HM Land Registry, you’ll find the process straightforward and varied enough to suit different preferences.

You can pay your Land Registry fees by cheque or postal order, made out to ‘HM Land Registry’, and sent along with your application to their standard address. Just remember that any delays in processing due to inaccuracies or missing information can be a bit of a speed bump on the road to registration.

If you’ve got a Business e-services account, you can conveniently pay your fees using variable Direct Debit for both services and applications. Think of it as setting up an autopay for your utility bills – it’s one less thing to worry about.

When to pay

Timing’s everything, and this holds true for paying your Land Registry fees as well.

Typically, these fees are paid after the completion of the relevant Land Registry forms, during the conveyancing stage of the property buying process. It's a bit like paying for a service after you’ve filled out the paperwork.

The conveyancing stage is where your solicitor or conveyancer earns their stripes, managing the complexities of the buying process, including fee payments.

Payment methods

As for how you can pay these fees, HM Land Registry offers a range of payment methods to suit different circumstances.

For most people, cheques or postal orders are the way to go. Just make sure they’re payable to ‘HM Land Registry’ and include them with your application. Whichever method you choose, getting your payment right ensures a smoother journey to the finish line of property registration.

Variable Direct Debit is a preferred method for those with a Business e-services account, streamlining the process and cutting down on paperwork.

Summary: Part and parcel

As we wrap up our guide to Land Registry fees, it's worth noting that these costs are not just another hurdle in the property buying race. They’re essential to the legal recognition of your ownership, ensuring that your investment is secure and your rights as a property owner are intact.