Whenever a transfer is registered at Land Registry, rule 17 of the Land Registration Rules 2003 needs to be considered. Rule 17 gives HM Land Registry the right to request evidence of identity for any party to a transaction not represented by a conveyancer. They will request that evidence unless one of a limited a number of exceptions apply. One such exception is the “low value exception”.

The Low Value Exception

HMLR’s identity rules are designed to protect against property fraud – specifically, property theft. Where the value of the land transferred is very low, the risk of theft is greatly reduced because to a criminal, stealing something with not much value isn’t worth the risk.

For this reason, Land Registry policy is not to insist on rule 17 identity evidence if the land which is the subject of the transfer is less than £6,000.

Risk of Reliance on the Low Value Exception

Although the rule makes sense, there is still the problem of establishing value. HMLR say that if no rule 17 evidence is supplied they will expect a certificate from someone qualified to assess value confirming the land / title is indeed worth less than £6,000 – such as an estate agent or valuer. It is the value of  the land that is relevant, not the purchase price.

Although they do not specify that the person confirming the value must have ant particular qualification or be part of a particular body etc, HMLR may well reject confirmation from the applicant (unless that person is suitably qualified or experienced) and a conveyancer cannot be expected to offer an opinion.

What that means is that, in order to avoid providing an ID1 or ID2 in support of the transfer application, it may be necessary to instruct a valuer or estate agent to value the land. That is likely to be more expensive than arranging an ID1 or ID2, slower and it may be difficult to in practice, where there are not many available comparables.

Situations Where the Exception Might be Exercised

Clearly, it is very unlikely that land containing a useful building (i.e. not one that’s completely derelict), except perhaps a garage, will be worth less than £6,000. Generally, the land / title will be one of the following:

• An extension of the garden of a residential dwelling;
• The freehold reversion of a leasehold house;
• The freehold reversion of a block of flats where all of the flats are let on long leases;
• A rentcharge title;
• The title to an access road / accessway;
• An empty field or piece of scrubland with no development potential.