Guidance

Practice guide 19A: restrictions and leasehold properties

Updated 26 July 2021

Applies to England and Wales

Please note that HM Land Registry’s practice guides are aimed primarily at solicitors and other conveyancers. They often deal with complex matters and use legal terms.

1. Introduction

Most leases contain a covenant against the assignment or underletting of the property without the consent of the landlord. An entry will be made in the property register where the lease contains such a covenant, to ensure that a buyer is aware of it. A landlord may forfeit the lease in the event of breach of the covenant, if that breach activates a forfeiture clause in the lease.

Sometimes application is made for the entry of a restriction requiring the consent or certificate of a landlord or managing agent before a disposition can be registered. Restrictions that require the consent or certificate of a specified landlord or managing agent often create serious problems for a range of parties when the landlord or agent changes – for the buyer of a leasehold title subject to the restriction, for the registered proprietor who wants to sell that property and for any former landlord or agent named in the restriction.

Throughout this guide, we refer to the person with the benefit of a restriction as the ‘restrictioner’.

2. Applying for a restriction

2.1 Whether a restriction is required at all

You should consider whether a restriction is required at all, where the restriction is intended to ensure the performance of covenants in the lease, or whether it is sufficient to rely on the provisions contained in the Landlord and Tenant (Covenants) Act 1995 (or the doctrine of privity of estate for earlier leases). The Act makes covenants which have reference to the subject matter of the lease enforceable against whoever currently holds the lease.

2.2 Points to consider

2.2.1 Named lessor as restrictioner

If a restriction calls for the consent or certificate of a named landlord, obvious difficulties will arise in complying with the terms of the restriction (and therefore in registering any disposition of the leasehold title) if the reversionary title is transferred. The new landlord will not able to apply to alter or modify a restriction to substitute their name for the previous landlord. Also, the proprietor of the registered leasehold title (or a person to whom that title has been transferred) will be able to apply to cancel the restriction on the basis that the named restrictioner no longer has an interest in the property – see Landlord has changed.

In order to avoid the difficulties that may otherwise arise if the restriction requires the consent or certificate of a named landlord and that landlord changes, we strongly suggest that where a restriction is thought necessary consideration is given to application for the entry of a restriction in a form set out in Standard restrictions.

2.2.2 Management company as restrictioner

Restrictions in favour of management companies are rarely appropriate. If the management company changes, the tenant can apply to cancel the restriction; any covenants by and in favour of the management company in the lease will not pass to the new management company, so the restriction becomes superfluous. In any event, if the restriction is entered in favour of a corporate landlord (or the corporate proprietor of the reversionary title), a managing agent who is authorised to do so can give a consent or certificate on behalf of the landlord under rule 91B of the Land Registration Rules 2003.

2.3 Drafting points

2.3.1 Standard restrictions

If you decide that a restriction is required, we strongly suggest that you consider applying for a form of restriction that will not require the consent or certificate of a named landlord or agent, so that you avoid the difficulties that may otherwise arise if the landlord or agent changes. The standard Form PP restriction is specifically designed for registered leasehold titles and can be completed so as to avoid requiring the certificate of a named lessor or agent.

A Form PP restriction could be completed so as to provide as follows:

RESTRICTION: [No transfer or lease] of the registered estate [ ] by the proprietor of the [registered estate] [or by the proprietor of any registered charge, not being a charge registered before the entry of this restriction] is to be registered without a certificate signed by the proprietor for the time being of the registered estate comprising the reversion immediately expectant on the determination of the registered lease, or by a conveyancer, that the provisions of [clause 1.7] of [the lease dated 14 August 2005] have been complied with [ ].

(The square brackets denote where text can be inserted to suit the circumstances.)

However, if for a particular reason you are not prepared to allow for a conveyancer to provide the certificate, and you have the tenant’s consent to the entry of the restriction, you should consider a Form M or Form O restriction.

A standard Form M restriction could be completed so as to provide as follows:

RESTRICTION: No [transfer or lease] of the registered estate [ ] by the proprietor of the registered estate [or by the proprietor of any registered charge, not being a charge registered before the entry of this restriction] is to be registered without a certificate signed by the proprietor for the time being of the estate registered under title number [the title number for the reversionary title] that the provisions of [clause 1.7 of the lease dated 14 August 2005 have been complied with].

A restriction in this form will confine the person that can provide the certificate to the proprietor of the specified reversionary title.

If it the restriction is required to provide for consent, rather than a certificate, then a standard Form O restriction could be completed so as to provide as follows:

RESTRICTION: No [transfer or lease] of the registered estate [] by the proprietor of the registered estate [] [or by the proprietor of any registered charge, not being a charge registered before the entry of this restriction] is to be registered without a written consent signed by the proprietor for the time being of the estate registered under title number [the title number for the reversionary title].

2.3.2 Applications without the tenant’s agreement

We will accept an application for the entry of a restriction from the landlord based on the terms of the lease. So unless you lodge evidence with the application for the entry of the restriction to show that the tenant consents to the entry of a restriction in that form, we will usually be able to enter the restriction only if you can show that the entry of the form of restriction applied for is necessary or desirable for the purpose of section 42(1)(a) of the Land Registration Act 2002 as a result of the covenants given by the tenant in the lease.

Where you make an application on the basis of a covenant against assignment or underletting in the lease, we will accept only an application for a restriction which allows for the consent or certificate to be provided either by ‘a conveyancer’ or by ‘the applicant for registration [or their conveyancer]’. This is because a form of restriction that provides for only a named lessor or managing agent to give a consent or certificate would be neither necessary nor desirable. Such a restriction would give the restrictioner a greater degree of control over dispositions than that conferred by the general law.

2.3.3 Describing the restriction

As explained above, we strongly suggest that you do not frame restrictions to include a named landlord or management company as this can cause problems if they change. The following examples may be used instead of naming the landlord or management company in the restriction:

• The proprietor for the time being of [landlord’s title number]

• The proprietor for the time being of the registered estate comprising the reversion immediately expectant on the determination of the registered lease

3. Applications involving restrictions

This is only a summary. More details about applications relating to restrictions may be found in practice guide 19: notices, restrictions and the protection of third party interests in the register.

3.1 Withdrawal

The restrictioner can withdraw the restriction using form RX4. There is no fee for this.

3.2 Cancellation

Any person may apply to cancel a restriction using form RX3, including a person to whom the registered legal estate has been transferred but has not yet been registered. You need to explain why you think the restriction should be cancelled, and enclose any supporting evidence necessary to satisfy the registrar that the restriction is no longer required. There is no fee for this.

For example, if a tenant claims the corporate landlord has been dissolved, they must provide evidence that this is the case. For a UK company, we will accept a printout of the relevant Companies House web page stating the company is dissolved. In most cases we will require some evidence that the restriction relates to covenants in the lease, which could be in the form of a conveyancer’s certificate.

3.3 Disapplication

The registrar may cancel a restriction only where they are satisfied that it is no longer required. As an alternative you may be able to apply for the registrar to make an order to disapply the restriction under section 41(2) of the Land Registration Act 2002. It will not usually be possible to cancel (rather than to disapply) a restriction where, for example, the restrictioner cannot be traced or contacted or where it is claimed that a consent or certificate required under the terms of the restriction is being unreasonably withheld.

You need to apply using form RX2 to disapply a restriction, and pay the appropriate fee. As part of the application you need to identify the disposition in respect of which you wish the registrar to make an order to disapply the restriction, and why you believe it should be disapplied. We will ask for additional evidence if necessary.

4. Complying with the restriction

The restriction sets out the terms which need to be complied with to allow the application to proceed. Restrictions relating to the covenants in the lease usually require a consent or certificate from the landlord or a management company. You can provide a consent or certificate using form RXC if you wish. Guidance on the form can be found in section 3.1.6 of practice guide 19: restrictions, notices and the protection of third-party interests in the register.

The purpose of restrictions is to regulate registration, not regulate dispositions. So, where a restriction entered in the register requires consent or has an option requiring consent, the consent given in relation to the restriction must expressly consent to the registration of the disposition, not consent to the disposition. This requirement does not apply to a restriction that requires a certificate. In that case, all that is needed is that the certificate complies with the requirements of the restriction.

Sometimes circumstances dictate that it will be difficult to get the necessary consent, and the following paragraphs set out the procedure to follow.

4.1 Landlord has changed

If the consent or certificate of a named landlord is needed and that landlord has transferred their interest, then we can accept an application to cancel the restriction on the leasehold title from either the new landlord or the tenant, where the restriction relates to the covenants in the lease. The reason for this is the entry will have become superfluous, will no longer be required and may therefore be cancelled under rule 97 of the Land Registration Rules 2003 using form RX3.

The application should be accompanied by a conveyancer’s certificate that the restriction relates to the covenants in the lease and is therefore no longer required. If no conveyancer is acting or if it is not possible for a conveyancer to provide this certificate, then the application will need to be accompanied by evidence to show that the restriction does relate to the covenants in the lease or that the restriction is otherwise no longer required.

If the new landlord has not yet registered their transfer and the freehold is still registered to the previous landlord, you must produce evidence of the transfer. This would be a certified copy of the TR1 for a registered title or for an unregistered title you would need to deduce title in full.

A new restriction may be applied for using form RX1; see Applying for a restriction.

4.2 Landlord is a dissolved company

If the consent of a named corporate landlord is needed and that company has been dissolved, the tenant may apply for cancellation (form RX3) or disapplication (form RX2) of the restriction. Evidence of dissolution of the landlord must be submitted, along with a conveyancer’s certificate that the restriction relates to covenants contained in the lease. Cancellation of the restriction may be considered preferable to disapplication, unless it is likely that the company will be restored in order to perform its obligations under the lease.

If an interested party wishes to apply to have the company restored, see Restore your dissolved company.

4.3 Management company has changed or been dissolved

Sometimes a management company which is not the landlord will be appointed to run the development and the restriction may be in their name. Any covenants in the lease by or in favour of the management company will not pass to a new management company, so the restriction will be superfluous when the management company changes or is dissolved.

Where either a new management company has been appointed or the existing management company has been dissolved, then the tenant or landlord may apply for cancellation of the restriction using form RX3. Evidence of dissolution of the management company must be submitted (if relevant), along with a conveyancer’s certificate that the restriction relates to covenants contained in the lease. The applicant will need to provide some evidence that the named management company is no longer acting, which could be a letter from the landlord or the new management company.

If a new restriction is required, see Applying for a restriction.

5. Right to manage companies

A right to manage company can give a consent or certificate in place of the landlord or management company where it has taken over the landlord’s management functions in a lease. For information about this please see practice guide 27: the leasehold reform legislation.

Cancelling a landlord/management company restriction where a right to manage company has been appointed cannot be done without consent of the landlord, the right to manage company and the tenant.

6. Freehold land

Restrictions are sometimes entered on freehold titles in order to ensure compliance with positive covenants. The information in this guide does not apply to cancelling such restrictions on freehold titles because the burden of freehold positive covenants does not run with the land and there are no equivalent provisions to those contained in the Landlord and Tenant (Covenant) Act 1995.

7. Things to remember

We only provide factual information and impartial advice about our procedures. Read more about the advice we give.