Land Registry justifies fee increase

The Land Registry has defended its decision to hike its fees by 30% and says it is already digging into its reserve funds after seeing a significant fall in property transactions.

The government body depends on fee income to cover its costs and has been seriously affected by the fall in property transactions over the past year.

The increase means that from July 6 the fee for registering a property worth 100,000 will increase from 100 to 130. For a property worth 1m the fee will go up from 420 to 550.

There will also be hikes in fees for providing information including official searches and copies with, for example, the fee for a postal official search increasing from 6 to 8.

The Land Registry says it has already taken a range of measures to cut costs, including a voluntary redundancy scheme and an accelerated plan to merge offices.

It says it is keeping the situation under review and that any future reduction in fees will depend on the strength of the recovery in the property market.

A spokeswoman says: “In the past 15 years the Land Registry has reduced its fees on eight occasions. As a trading fund we have a statutory requirement to set fees to cover our costs and provide a return of 3.5%.

“We are already using the monetary reserves which we have built up as a result of inadvertent surpluses in previous years to offset the loss in 2008/09.”

She adds: “We anticipate seeing a further loss in 2009/10 and the additional income raised through this fee order should offset some of that.”

But not everyone is happy about the increase.

Torild Bastien, independent mortgage adviser at Iver Mortgage Company, says: “The Land Registry is a government body. Why should it be allowed to increase fees to compensate for market conditions? Higher fees will make the housing market even more difficult.”

Heather Foster, finance director at the Land Registry, says it does not believe the increase be a deterrent to market recovery, especially in the context of interest rates at historically low levels and lower house prices.

She stresses that fee increases are rare and adds that since 1993 eight of the nine fee orders introduced by Land Registry have reduced fees.