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Dáil Éireann debate -
Thursday, 17 Feb 2000

Vol. 514 No. 5

Adjournment Debate. - Registration of Title.

Mr. Hayes

I congratulate Deputy Hanafin on her appointment as Minister of State and wish her well, but I am disappointed that the Minister for Justice, Equality and Law Reform, Deputy O'Donoghue, is not in the House. The traffic to Caherciveen must be so bad that he got away early.

The Minister's decision to arbitrarily increase Land Registry fees will add further financial pressure to home owners and potential buyers. This little known measure which the Minister invoked on 19 September 1999 will virtually double the costs associated in the purchasing or transferring of property in the housing market.

The proposed fee increases will make a huge difference to the costs associated with purchasing a house to the average home buyer. Already the excessive costs in purchasing property, as seen in the punitive rate of stamp duty and the professional fees involved, are making it virtually impossible for people to purchase a home. The Minister's decision to increase Land Registry fees will make it more difficult for a first time buyer to enter the market. I would like to know from the Minister the reasons behind his decision to impose such a dramatic fee increase. It is worth pointing out that at no stage prior to signing these statutory instruments did the Minister consult the Law Society. Members of the profession were not made aware of the level of registration fee increases being sought or of the new heads of charge until after the fees order was published.

Therefore, the Minister should explain to the House his precise reasons for increasing these charges. Moreover, the imposition of a new set of charges which was part of the statutory instru ment signed last September, will further confuse and complicate an already dated system of conveyancing charges. Will the Minister confirm if the increases in the fees imposed will have a corresponding guarantee of increased staffing at the Land Registry office?

It has been known for quite some time that the huge backlog at the Land Registry is placing considerable inconvenience on purchasers and their solicitors. For solicitors attempting to conclude various transactions, only one hour exists every working day, where they can liaise directly with members of staff at the Land Registry.

There is no longer a maximum fee per transaction in place as a result of the Minister's statutory instrument. Previously this fee was £250 and the following example will highlight the inflationary nature of the Minister's proposals on house purchasers. A property costing more than £40,001 will attract a fee of £300, together with a further fee of £50 if a new folio is to be opened, and a fee of £100 if there is a mortgage. Therefore, the new transaction cost is £450.

As the vast majority of acquisitions are well in excess of £40,000, it is logical to assume that all purchasers, and particularly those at the lower end of the fee scale, will pay a minimum of £450 for a transaction which currently costs £250. Neither the Land Registry nor the Minister can justify this increase of over £200 in the most basic transaction.

While there are many other fee increases attached to the statutory instrument, one which should be exposed, is a new charge of £250 for approving a scheme map for new building estates. This charge will presumably be passed on to purchasers of new houses, together with a further additional charge of £500 or £1,000 should the scheme map have to be revised at a later date. It should be pointed out that the Land Registry does not enjoy semi-State status and is, in effect, an administrative arm of the Department of Justice, Equality and Law Reform. The Minister's right to increase fees, which have not been increased since 1991, should be understood in the context of the primary legislation which was enacted in 1964. That legislation precludes the Minister from increasing fees at the Land Registry in order to provide additional resources. Furthermore, in the most recent report from the Land Registry, it is quite clear that a significant operating profit exists and that such moneys have been siphoned off by the Department of Finance or the Department of Justice, Equality and Law Reform.

I assure the Deputy that the Minister is far from Caherciveen undertaking work within his remit.

I will set out the background to the matters to which the Deputy is referring. The Minister has approved two new fees orders for the Land Registry and the Registry of Deeds. The Registry of Deeds fees order took effect from 1 February last and the Land Registry fees order will take effect from 1 May next. The orders give effect to a comprehensive review of the structure of the fees charged for the various services provided by the registries. They have been designed to provide a fair and balanced response to the changes which have taken place in the conveyancing and property markets since the previous orders were introduced in 1991.

The House will be aware that the Government has approved the conversion of the Land Registry and the Registry of Deeds to a commercial semi-State body. The necessary legislation is being prepared at present. The new fees structures which the Minister has approved for both registries is an essential element of the preparations for the conversion. The new organisation will be expected to operate in a commercial environment and it will be extremely important to ensure that the fees are set at the correct levels having regard to the costs of providing the services and the need to ensure that the new organisation is placed at the outset on a sound commercial and financial footing. There has in recent years been substantial investment in the registries infrastructure, in particular in the information technology area.

The new fees orders are also intended to simplify the fee structure for users of the registries' services and reduce the instance of inequities in the old system. They reflect the registries objective of being responsive to the marketplace. One example of this is the introduction of a flat rate for the registration of mortgages. Uniquely, also, within the conveyancing chain, the registries operate on a fixed fee rather than a percentage basis. The new fee orders continue this approach.

As I have stated, this is the first review of the fees charged since 1991 and in the circumstances the current fees orders are long overdue. The fees being charged have for some time, in many cases, represented only a fraction of the cost involved in providing the services. The revised orders represent a first but necessary step in addressing this situation.

I would like to take this opportunity to outline some of the features of the new fees structure contained in the orders. While the overall rate of increase varies, the cost of the most common dealing, the registration of a transfer of property valued at between £40,001 and £200,000, has been increased from £250 to £300. This is a 20% rise which is not unreasonable given the rate of inflation of approximately 18% since 1991.

I assure the Deputy that contrary to his belief there is a fixed fee per transaction in this new fees order. This has eliminated the more arbitrary nature of the present dealings based fees order. Compensation payments to registry clients are linked to the value of the property registered. For example, a property with a value of £1 million would generate a greater compensation payment were an error to be made in the registration of the title than a property with a value of £100,000. Yet the fee to the registry currently is the same, £250. This is an example of the inequity referred to earlier and the new fees order is structured in order to reduce such inequities while operating within reasonable parameters in relation to the maximum fees payable.

In some instances fees are being reduced. For example, a flat fee of £100 is being introduced for the registration of charges as opposed to the situation previously where the fees were based on the amount of the mortgage. Fees for transfers are also being reduced. A transfer of £40,000 will now cost £200, a reduction of £50.

The Land Registry currently offers a free service to builders and solicitors where a scheme or a multi-storey development is being carried out. This service is extremely time consuming and the proposed new fee will not compensate for the time involved. It goes some way, however, to recognising the amount of resources required in the registry, such as those highlighted by the Deputy, to service such dealings. Typically, a scheme map would contain anything from ten to 50 plus sites and it is estimated that the average cost per site will be from £1 to £25.

In the Registry of Deeds general increases in line with inflation have been implemented. The main charge for the registration of a memorial is being increased from £26 to £35. The daily search fee of £10 per day has been eliminated and has been replaced by a £1 search fee per name per ten year period. This will reflect the actual usage of the service.

I trust that the House will acknowledge that the new fees orders are both necessary and fair. They are being implemented following careful consideration and with the approval of the Minister and the interim board of the land registries whose function it is to advise the Minister regarding the smooth transition of the registries to commercial semi-State status. As regards the Deputy's comments on the effect of these revised fees on the costs associated with purchasing property, any reasonable examination of the facts will reveal that the effect on the cost of the typical property will be negligible in comparison with the costs associated with the purchase and various other costs involved.

The Dáil adjourned at 5.25 p.m. until 2.30 p.m. on Tuesday, 22 February 2000.

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