Land Registry surcharge could fund free OS data surprisingly cheaply
One suggestion that has been made by Robert Barr (of Manchester Geomatics) and echoed recently by Ed Parsons on his blog (though I think Ed came up with it independently) is that Ordnance Survey’s non-refined data (that is, the stuff it does as part of its public task, which the Cambridge economics study of trading funds interpreted to be its MasterMap and Large Scale Topo) could be made available for free by making up any funding shortfall from a surcharge on Land Registry transactions.
The reasoning: most LR transactions involve OS mapping.
According to the study, that would cost between £12m and £30m in foregone revenue.
So how much would you have to add to Land Registry transactions to make up that amount? It sounds like an awful lot of money to generate.
Here are the figures I’ve culled from the Land Registry’s performance data for the past three years on the number of transactions.
| Number of registrations | 2004/5 | 2005/6 | 2006/7 | Mean 04-06 | As % of total |
| first registrations | 297,405 | 309,609 | 304,391 | 303,802 | 4.3 |
| discharges | 2,486,875 | 2,502,318 | 2,605,620 | 2,531,604 | 35.8 |
| mortgages | 2,680,128 | 2,627,999 | 2,723,530 | 2,677,219 | 37.9 |
| transfers for value | 1,378,200 | 1,270,867 | 1,480,819 | 1,376,629 | 19.5 |
| leases | 167,234 | 173,610 | 197,546 | 179,463 | 2.5 |
| Total | 7,009,842 | 6,884,403 | 7,311,906 | 7,068,717 | 100 |
| Total w/o discharges | 4,522,967 | 4,382,085 | 4,706,286 | 4,537,113 | 64.2 |
With millions of transactions, it looks like raising £12m – £30m wouldn’t actually be too hard. “Discharges” are the ending of a claim to a legal title – generally, though not always, the end of a mortgage. They attract no fee at present. Other LR charges range from £2 (for a search) to £700 (for first non-voluntary registration of a pricey parcel of land). Most of the charges, though, are £20 – £40 and upwards.
So to find the £12m that the trading funds report suggests OS would lose solely from non-discharge transactions would mean adding £2.65 to the cost of each LR transaction.
If we take the loss in revenue to OS as £30m, then it means adding £6.61 to each transaction. It’s not more than the cost of any transaction (except searches – which aren’t the same as the “searches” one does when buying a house; those go through your local authority), and compared to the cost of the typical transaction – say, the average £180,000 house purchase – it’s peanuts.
Right – that’s the analysis done. Now we just need to find a minister who is in charge of Land Registry and Ordnance Survey and can tweak the legislation (it doesn’t need primary legislation, surely?) to make these changes. And we’re done.
This analysis also appears (without the fun table) in today’s Guardian: Land Registry holds key to free OS.
- The following posts may be related...(the database guesses):
- Could a surcharge on planning applications fund free data from Ordnance Survey? (1 April 2008; score: 67.87%)
- A spoke in the wheels of Land Registry transaction fees to pay for Ordnance Survey? (4 March 2010; score: 64.07%)
- And while we're talking about Land Registry.. here comes UKMap (5 March 2010; score: 41.03%)
- If you get free data, what will you do with it? (19 April 2008; score: 38.66%)
- Reorganising this blog: different category suggestions (19 June 2009; score: 37.12%)
March 27th, 2008 at 2:33 pm
I think we should credit Robert for this idea.. which I only echoed, although the linking of mapping to land registration and planning is widespread in other countries where there is a more explicit relationship as there are cadastral systems in place.
Another possible registration route of funding might be via the planning process, although this would be more complex as it is not centrally organised.
ed
March 27th, 2008 at 2:58 pm
@ed – I wasn’t sure whether you’d had the idea yourself.
I’ve got the figures on planning applications – I was going to look at those subsequently. Surprisingly, the early numbers suggest it wouldn’t be as effective as LR transactions: they’re about an order of magnitude less.
March 27th, 2008 at 3:46 pm
Why should I pay more to move house, take out a mortgage or redeme a mortgage just so others can get “free access” to OS data and make profitable businesses from it. This seems totally unfair on the private citizen who is in effect being asked to subsidise big business and entrepreneurs.
March 27th, 2008 at 4:36 pm
@V Yates: because making that data free to use by entrepreneurs is likely to improve both the national economic situation and quality of life by encouraging innovation. What kind of innovation? The kind of innovation that give Google and Yahoo such massive market share, except that this time the companies might be British ones. The kind of innovation that leads to accessible tools for charting social problems and proposing solutions to them, like everyblock.com and openplans.org
You know, it might be possible to use the data to create tools that would make the housing market so much more efficient that you’d save way more than £6.61 next time you move. Or perhaps in the future you’d buy a property that’s worth more than £6.61 more to you (because of the environmental surroundings, for instance, as revealed by pollution maps or crime maps). You might find that with the data, someone creates a tool that you use daily or weekly, and that saves you minutes of grief each time compared with the tools you were using previously. That’s got to be worth £6.61 over the course of, say, a year (and I doubt you move house more than once a year).
All these options sound to me like they’re worth spending an extra %0.004 of the cost of my next (first!) house on upfront.
March 27th, 2008 at 6:37 pm
Sam,
Have you read the full Cambridge report – I have.
The case is very poorly made indeed and the assumptions are many. It would only take a very small change in some of the assumptions to make the arguement come down strongly in favour of the status quo. Where does this cross subsidy idea stop? This is in effect demanding that private individuals pay a TAX when they buy or sell their house so some entrepreneur can make millions out of free data. This is totally wrong and totally contrary to the well established principle of the “user pays”. This will in effect distort markets by removing this important principle.
The Cambridge report uses flawed ecomnomic arguements (the terms of reference specifically excluded consideration of these and other important factors) and ignores many other equally important principles (both economic and otherwise) which are against the FOD idea.
The Free our Data campaign is poorly founded in that it is NOT in many cases “our data”. In many cass the taxpayer has not paid for it but a business, albeit a government owned one, has – a business which is funded totally by the customers of that business who have NO CHOICE but to trade with that part of government. If the OS were a private sector company no-one would suggest the data would be free – why should they simply because the government owns, but importantly does NOT fund, it.
The idea that Land Registry fees are increased to that OS data can be free is absurd. Part of the report also suggests that Land Registry fees are increased so as to fund free access to the LR data itself. If these two things are added together then the TAX on home buyers wil become outrageous.
There are also other issues with Land Registry data in conection with privacy where LR have recently been forced to reduce access to information to reduce fraud. The FOD campaign would provide a field day for fraudsters not to mention the above points.
I am sure we can all think of some “inelastic” goods which we could TAX to subsidise our favourite hobby horse – why not add much more to LR fees to fund the health service for example – once this idea is taken up there wil be no end.
March 27th, 2008 at 9:23 pm
@V Yates:
Could you specify? That would be useful. I think a number of the assumptions grew from the fact that the trading funds couldn’t, or wouldn’t, split their “raw” and “refined” duties (or “public” and “extra” tasks.
This cross-subsidy idea is one we’re examing in this campaign because it’s politically more welcome than suggesting government just finds an extra £12m=£30m from Treasury to fund the idea.
Private individuals already have to pay when they buy (not sell – there’s no charge for discharges, which is why one estimate above excludes them) a property: registering is obligatory under law, with Land Registry. The surcharge suggested is small compared to the LR fees, and miniscule compared to the price of the typical house – moreso once you factor in other costs such as moving and solicitors’ fees.
Entrepreneurs making money? And presumably employing people in a creative industry using information (which the government keeps telling us is important); and presumably also people won’t pay money if they don’t think the service has value. (It’s the Adam Smith principle.) And competing with other entrepreneurs with access to the same data, who might push the price down. Users benefit.
The principle of “user pays” is not well-established in the field of taxation and government. In fact, it’s non-existent. I pay for schools in Wales and hospitals in Scotland through my taxes. That’s fine: society benefits. In this case, a large group (7m transactions, notice) pays a small charge, because they’re doing a transaction which is based around OS data, which benefits wider society. They’re the user, the beneficiary and if they make those millions, perhaps they’ll be paying for it too through those LR surcharges.
Please cite them. It would be good to have some debate about the study.
Who elects government? We, the citizens. Who funds government? We, the citizens. Who therefore owns the government’s businesses? We, the citizens. We are trying to decide what the best way to organise those businesses is. There isn’t just one way to do it.
And government *does* fund OS. Just indirectly, by buying its products. Some departments can’t afford to, and the quality of their output suffers as a result. Others can’t share results because of “crown copyright” and restrictive use. Does that really benefit society?
We don’t like the idea of OS being a private-sector organisation, for reasons we’ve cited here many times.
We’re suggesting £6 on a transaction that is worth thousands of times more. The wider benefits have been evaluated (though you’re welcome to submit your own calculations, pointing out where the Cambridge study went wrong) as being more than £100m.
The FOD campaign has always insisted it’s about non-personal data. We don’t want more fraud. Our suggestion relates to OS and its mapping products specified in the Cambridge report, not LR data (though sensible free release of that would be part of the campaign).
Putting “tax” in capitals might make it look scarier, but the obvious retort to your suggestion is that LR transactions don’t have any relationship to hospital admissions. However, every LR transaction is related to an OS location: they’re symbiotic. That’s why geographers think it might make sense to use that connection in this way.
Also, you misattribute the inelasticity of LR demand. It’s inelastic not because it’s essential (we can live without buying a plot of land) but because its charges aren’t deal-breakers in the transaction. Perhaps it would be more accurate to say that its charges show a large degree of inelasticity. If they got to the levels of stamp tax, that would change. But we’re definitely not suggesting that.
March 28th, 2008 at 10:06 pm
Charles Arthur Says:
March 27th, 2008 at 9:23 pm
@V Yates:
Have you read the full Cambridge report – I have. The case is very poorly made indeed and the assumptions are many. It would only take a very small change in some of the assumptions to make the arguement come down strongly in favour of the status quo.
Could you specify? That would be useful. I think a number of the assumptions grew from the fact that the trading funds couldn’t, or wouldn’t, split their “raw� and “refined� duties (or “public� and “extra� tasks.
See (1)
Where does this cross subsidy idea stop? This is in effect demanding that private individuals pay a TAX when they buy or sell their house so some entrepreneur can make millions out of free data. This is totally wrong and totally contrary to the well established principle of the “user pays�. This will in effect distort markets by removing this important principle.
This cross-subsidy idea is one we’re examing in this campaign because it’s politically more welcome than suggesting government just finds an extra £12m=£30m from Treasury to fund the idea.
See (2)
Private individuals already have to pay when they buy (not sell – there’s no charge for discharges, which is why one estimate above excludes them) a property: registering is obligatory under law, with Land Registry. The surcharge suggested is small compared to the LR fees, and miniscule compared to the price of the typical house – moreso once you factor in other costs such as moving and solicitors’ fees.
Entrepreneurs making money? And presumably employing people in a creative industry using information (which the government keeps telling us is important); and presumably also people won’t pay money if they don’t think the service has value. (It’s the Adam Smith principle.) And competing with other entrepreneurs with access to the same data, who might push the price down. Users benefit.
See (3)
The principle of “user pays� is not well-established in the field of taxation and government. In fact, it’s non-existent. I pay for schools in Wales and hospitals in Scotland through my taxes. That’s fine: society benefits. In this case, a large group (7m transactions, notice) pays a small charge, because they’re doing a transaction which is based around OS data, which benefits wider society. They’re the user, the beneficiary and if they make those millions, perhaps they’ll be paying for it too through those LR surcharges.
See (4)
The Cambridge report uses flawed ecomnomic arguements (the terms of reference specifically excluded consideration of these and other important factors) and ignores many other equally important principles (both economic and otherwise) which are against the FOD idea.
Please cite them. It would be good to have some debate about the study.
See my response in (1)
The Free our Data campaign is poorly founded in that it is NOT in many cases “our dataâ€?. In many cass the taxpayer has not paid for it but a business, albeit a government owned one, has – a business which is funded totally by the customers of that business who have NO CHOICE but to trade with that part of government. If the OS were a private sector company no-one would suggest the data would be free – why should they simply because the government owns, but importantly does NOT fund, it.
Who elects government? We, the citizens. Who funds government? We, the citizens. Who therefore owns the government’s businesses? We, the citizens. We are trying to decide what the best way to organise those businesses is. There isn’t just one way to do it.
And government *does* fund OS. Just indirectly, by buying its products. Some departments can’t afford to, and the quality of their output suffers as a result. Others can’t share results because of “crown copyright� and restrictive use. Does that really benefit society?
We don’t like the idea of OS being a private-sector organisation, for reasons we’ve cited here many times.
See (5)
The idea that Land Registry fees are increased to that OS data can be free is absurd. Part of the report also suggests that Land Registry fees are increased so as to fund free access to the LR data itself. If these two things are added together then the TAX on home buyers will become outrageous.
We’re suggesting £6 on a transaction that is worth thousands of times more. The wider benefits have been evaluated (though you’re welcome to submit your own calculations, pointing out where the Cambridge study went wrong) as being more than £100m.
See (6)
There are also other issues with Land Registry data in conection with privacy where LR have recently been forced to reduce access to information to reduce fraud. The FOD campaign would provide a field day for fraudsters not to mention the above points.
The FOD campaign has always insisted it’s about non-personal data. We don’t want more fraud. Our suggestion relates to OS and its mapping products specified in the Cambridge report, not LR data (though sensible free release of that would be part of the campaign).
I am sure we can all think of some “inelasticâ€? goods which we could TAX to subsidise our favourite hobby horse – why not add much more to LR fees to fund the health service for example – once this idea is taken up there wil be no end.
Putting “tax� in capitals might make it look scarier, but the obvious retort to your suggestion is that LR transactions don’t have any relationship to hospital admissions. However, every LR transaction is related to an OS location: they’re symbiotic. That’s why geographers think it might make sense to use that connection in this way.
See my response in (4).
Also, you misattribute the inelasticity of LR demand. It’s inelastic not because it’s essential (we can live without buying a plot of land) but because its charges aren’t deal-breakers in the transaction. Perhaps it would be more accurate to say that its charges show a large degree of inelasticity. If they got to the levels of stamp tax, that would change. But we’re definitely not suggesting that.
(1)
Asking me to provide a full economic rebutal to a report of 154 pages in length which has taken a team of economists several months to produce in a blog is not practical however as an example of the failure in analysis I cite the section on elasticity oif demad (pages 35 to 45) which has several assumptions. There is absolutely no sensitivity analysis at all around the conclusions of this section of the report to changes in the assumptions and no sensitivity analysis of the overal report conslusions either. I would expect that given the large number of assumptions throughout the report one might expect any rigorous economic work to have done this. I maintain that it wouldnot take much change to some of the assumptions to alter significantly the creports conclusions. I ask the authors to demonstrate otherwise since they are seeking a major change in government policy (as are you) bsed on this report. This is not an unreasonable request.
(2)
However you make no reasoned case as to why Land Registry users should in effect subsidise every user of OS information. it is this I fundamentally object to. Why should house transactors subsidise hill walkers (or whoever would benefit from this free OS data)? You are simply picking a “soft touch”.
(3)
In this case why dont you propose we put a much greater increase on Land Registry and use the funds to supply grants to entrepreneurs who want to start any new business – come to think of it that is exactly what you are proposing – entrepreneurs should get subsidised free data – why restrict it to data buinesses.
(4)
This is fundamentally wrong. The Land Registry is “linked” to OS data but it is not OS based data – the register changes which a buyer or seller registers or a new chargee registers (or other interested party) is the information about the purchaser or the charge which is not OS based at all. May I suggest you download a copy of a Register for your house and examine it – there is almost nothing which leaps out at you as being OS based – the title plan, a separate document, has close resemblance to an extract of an OS map but even that is the registered extent of the property and not linked to physical features so significantly differentiating it from the OS detail. The register of title itself is pure text.
To follow this arguement would have Land Registry fees next being increased to fund planning applications or environmental data asociated with properties. This idea is the thin end of the wedge and would in effect make Land Registry a tax collector for Government. If you or others want to make the arguement for free data then you must make the arguement that this is funded from general taxation and not cross subsidised.
(5)
You are mudling ownership of the organisation with payment for the services and consequently the creation of the data. If the data is issued “for free” then someone has to bear the cost. (There will also potentially be substantial additional costs which Cambridge ignored to fund distribution channels for this data.) It is unfair to make the users of the other services from that organisation pay for the increased costs so that others benefit and to argue that because we the taxpayers own the organisation then one sub set of taxpayers should pay this is also unfair. If the data is to be “free issue” then this must be funded out of general taxation otherwise distortions will occur. The Cambridge arguement (and Ramsey pricing) only says in effect that these distortions are acceptable because the demand for these services is inelastic and, in effect, the user will have to grin and bear it and pay up.
(6)
My point is that the calculations are subject to considerable error and no estimate of this has been provided by Cambridge – see 1 above. In addition no estimate of the additional costs to distribute the data have been made. Cambridge assume the marginal cost is nil. While the marginal cost may be nil to a first approximation the full cost of most certainly not nil and if all the data is then “free” this total cost has to be met – this is a major flaw in the Cambridge arguement.
In conclusion the terms of reference of the cambridge reoprt made the concludion they cam eto the only one they could arrive at. Several things were excluded from consideration including investment costs, and many assumptions were made for which no sensitivity analysis was provided. Maybe you shopuld ask why the report which was promised in December was so delayed – perhaps because the arguement is so flakey.
V Yates.
March 28th, 2008 at 11:06 pm
@V Yates: I’ll let others respond to your other points, but one I do know about:
The team can’t be blamed for not exceeding its terms of reference. As for the delay – I understand the government held on to it because it wanted to include it with the budget (the study is specifically referred to in Chapter 3 of the full budget, and was released on budget day), which mentions creative industries. Interesting, eh?
March 29th, 2008 at 10:26 am
Of course the team should npot exceed their tems of reference but then the conclusions must be reviewed in the light of this. The aditional cost, including investment, is potentially significant and in the absence of a “market” where people pay for the data how does one determine if the investment is worth it.
As for the lack of sensitivity analysis then I believe this was not excluded from the TORs and should have been provided. The lack of this makes the conclusions substantially less robust. Most “consultants” provide such an analysis as a matter of routine and given that the reoprt would be read by many non economists I believe it was encumbant on them to do such.
The delay – um – i dont buy into that theory. the date of the Budget is known for months so if this was going to fall into this arena then why was the date originally November / december. There is a big time difference between this and when released – I suspect that early drafts were full of holes and sent back. I also point to the rapid response from BERR which indicates that others know the shaky foundations / assumptions and have effectively pushed this into the long grass.
V Yates.
March 30th, 2008 at 9:55 pm
Charles Arthur has asked me to post some information which I have sent him privately as part of a private email exchange.
I believe the exchange between him and me is getting far to “all encompassing” to debate over the blog.
My main contention on the Cambridge study is that it was constrained in such a way that the only conclusion they could have come to was the one they did. After all there is bound to be a benefit from free data if (as Cambridge does) ALL other factors such as investment costs, other consequential costs, market distortions, etc are ruled out of consideration by the TORs. It does not take a team of Cambridge economists to determine that others would benefit if any organisation provided free services!! However this was their remit but I do find it bizarre, indeed inexcusable, that professional economists who were supposed to be completing a consultancy report did not do any sensitivity analysis at all. There are many assumptions and given the incomplete data available to come to an apparently rigorously quantified conclusion as they do is hardly rigorous analysis.
The report in my opinion is therefore fatally flawed and as DBERR have indicated – it appears that nothing will in reality change.
Charles has also made reference to me in our private exchanges to the Met Office and its bulk data.
Met Office bulk data is very different from other bulk data in that it is to a significant part collected through an international protocol whereby all Met Offices freely exchange data collected over their territory since it is impossible to produce meaningful forecasts without worldwide observations. Much of this data is also now collected through internationally funded space programmes. The data collection cost to all met organisations worldwide is therefore effectively syndicated. The release of this, in effect, internationally syndicated data is managed and controlled through the World Met Organisation under international protocols. To disturb these for some debatable local economic benefit could potentially put at risk the life critical services of international meteorology.
This is but one other example of why the one size fits all model of “free our data” cannot be applied to all UK organisations. Even the Cambridge report sees at least two different sorts of Trading Fund – registration based where they suggest Ramsey pricing is applied so subsidising data access from other customers and the others where they don’t really have a solution other than to say Gov to fund and where, in the case of OS the FOD campaign now suggests that one “registration basedâ€? organisation, Land Registry, pick up the tab and passes it on o its customers. Even this is far too simplistic as the Met Office example above illustrates.
Charles also gave the example of how I benefit from “free Googleâ€?. Of course I and others get benefit from these services but Google pay for access to their OS data and recover their costs through advertising and other means. In effect I “payâ€? for Google by becoming subjected to advertising – much as I pay for ITV in the same way. This is fair as other users of OS data do not subsidise Google – the FOD model would have Google getting OS data for free – paid for by Land Registry customers – hardly fair.
Charles also suggests that what is being suggested (that Land Registry fees are increased to fund OS) is a practical, possibly expedient, political solution. I do agree that politics is the art of the possible and it is precisely because of this I do not believe that the Government will put another “tax” on housebuyers to fund the OS. The only way to fairly achieve the FOD ends is to lobby for a general change in the rules regarding Trading Funds and to have the Gov fund the “free data” costs – i.e. to be a “surrogate customer” for the free data. This is not impossible but would mean that the Gov establishes models with all Trading Funds separately (a not insignificant task) and metrics to pay them for what in effect would be new “public tasks”. While the models could probably have one set of principles given the wide variation of the operations of the Trading Funds each would have to be tailored to the individual organisation’s needs. There is then also the question of the “dataâ€? within non Trading Funds.
If there is to be a fair and equitable way to fund the release of such data from the Public Sector overall then the only fair way is for Government of fund the whole of this through in effect central taxation. Both Trading Funds and other organisations would then have this as a “public task� funded, as most “public tasks� are, from central funds. If the overall economy is to benefit from this then surely the overall economy should pay and not each organisation being made to penalise its other customers, or even as suggested that one organisation’s customers are penalised for the benefit of free data for the customers of another organisation, to meet this policy.
April 1st, 2008 at 9:36 pm
[...] A Guardian Technology campaign for free public access to data about the UK and its citizens « Land Registry surcharge could fund free OS data surprisingly cheaply [...]
August 27th, 2009 at 3:37 pm
To correct some misconceptions -
1. The vast majority of LR transactions do not involve use of OS data. Only new titles (i.e. previously unregistered land and transactions affecting only part of a registered title) produce title plans. Existing registrations, being the vast majority of transfers, mortgages and discharges, very rarely involve plans.
2. The Land Registry is an independant trading fund – i.e. revenue is paid into the Treasury, and LR business is self-funding. The Registry does not have any links to Ordnance Survey, other than as a customer, and has to pay a significant amount for use of OS data, which is copyrighted. The Land Registry also does not have any say in what happens to the money paid into the Treasury – it only has access to any “surplus” funds, so if the Registry does not make any profit over and above what the Treasury demands, then no money is available for non-essential projects, pay awards, etc.
The Registry and OS are not Civil Service departments.
3. The current economic climate has forced the Land Registry to increase its fees for the first time in a number of years to mitigate the effects of a £50million/year loss to the trading fund due to reduced workload. Although the increases have been relatively small (and despite fees actually having been reduced in the recent past) the number of complaints received by the Registry has doubled purely due to the unpopularity of any increase in the fees.