Rejection income at Registers of Scotland (RoS) has soared since the "one-shot" rule was introduced with the 2014 land registration reforms, a freedom of information request has revealed.
Oban solicitor Andrew Vennard asked RoS to state the income generated from land registration rejection penalties for the financial years from 2012-13 to 2015-16. The figures released in reply show rejection income for 2015-16 of £834,060, nearly three and a half times higher than the £243,060 in 2014-15, which was itself a significant increase on the £199,080 in 2013-14 and the £169,380 in 2012-13.
Under the Land Registration etc (Scotland) Act 2012, which took effect from 8 December 2014, applications for registration that contain errors or omissions requiring correction, must be rejected – the "one-shot" rule – rather than being temporarily set aside as under the previous system. Rejection fees were waived for the first two months of the new regime but have been applied since February 2015, near the end of the 2014-15 year.
For post-2014 income, the figures provided are broken into pre-intake and post-intake rejections, the latter being those applications that are rejected after making it past the initial screening (known as cancellations under the previous legislation). Post-intake rejection income amounted to £236,700 of the 2015-16 total, the first full year of the new system, pre-intake income accounting for the remaining £597,360.
Mr Vennard commented: "Like most conveyancing solicitors, I find it cause for concern that there has been such a huge increase in penalties, and that there is also an increasingly adversarial relationship between solicitors and RoS. The penalties are justified on the grounds that they help to cover costs, though in RoS's accounts for the year ending 31 March 2016, they reported a surplus of £7.6m, and so contrary to what RoS often state, the penalties are not necessary to cover the costs of rejection, as there would still be a substantial surplus without them."
A spokesperson for Registers of Scotland (RoS) said: “Rejected applications are expensive and inconvenient for both solicitors and RoS, and it is important to note, in the first instance, that this service costs RoS significantly more than it brings in through fees.
“We continue to consult with our customers, as well as the Law Society of Scotland’s Property Law Committee, to understand properly why mistakes are made and how they can be avoided, though the majority of rejections are for basic omissions and administrative oversights (such as failing to sign the application form)."
He pointed out that measures have been taken to help solicitors with the application process, including first-registration workshops with a section that focused on avoiding rejections, and a new knowledge base microsite containing registration guidance and additional support content (currently still in beta).
Consultation is also taking place on changes to the land registration application form to support digital submission, which aims to minimise the scope for an application to be rejected.
“The use of a digital form, allied to a digital deed prepared and submitted through a secure digital channel, will enable us to provide the applicant with increased confidence at the point of submission that the application meets the conditions of registration, while ultimately the drafting of dispositions would remain a matter for the solicitor", the spokesperson continued.
He added: “The quoted figures also need to be understood in context. The £243,060 figure covers a period where the 1979 Act was in force and the overall volume of rejections was lower because the Keeper permitted applications to be placed in standover while they were augmented by the submitting solicitor.
“The 2012 Act introduced the one shot rule because the Scottish Law Commission and the Scottish Parliament decided the standover process was inefficient and a waste of public money. The effect is that applications with errors or omissions which would have entered standover under the 1979 Act now require to be rejected. Finally, the £243,060 figure is also impacted by the period, shortly after commencement of the 2012 Act, where no rejection fee was payable.”