Should I Buy a House with Possessory Title

Buying a house with a possessory title can be a viable option, but it comes with important legal implications and potential risks that you need to fully understand before proceeding. In the UK, most residential properties are registered with an absolute title, which confirms the owner’s legal right to the land and any buildings on it. A possessory title, however, indicates that full legal ownership cannot be proven through traditional documentation and is instead based on possession alone.

This form of title is often granted when title deeds are lost or destroyed, or when someone claims ownership of land after long-term occupation without challenge. While possessory title is recognised under the Land Registration Act 2002, it is seen as less secure than absolute title, which may affect your ability to get a mortgage or resell the property easily.

What is a possessory title?

A possessory title is one of the four classes of title used by HM Land Registry in England and Wales. It is typically granted when an applicant cannot produce documentary evidence of ownership, such as the original conveyance or title deed. The Land Registry will register the applicant as the owner based on their claim of possession, often supported by statutory declarations or evidence of long-term occupancy.

This title gives you the legal right to occupy and use the property, but it carries a risk that someone else could emerge in the future with a stronger legal claim. If such a claim is proven, you may be forced to relinquish the property or pay compensation.

Who does this affect?

Possessory titles are more common in rural or unregistered areas, properties that have been inherited informally, or where documentation has been lost due to fire, theft or administrative error. They can affect private homeowners, landlords, developers and buyers of repossessed or derelict properties.

If you are a buyer, it is crucial to understand how the title may impact your ability to secure a mortgage, obtain indemnity insurance or protect your ownership against future disputes.

Can you get a mortgage on a possessory title property?

It is possible but more difficult. Most high street lenders are cautious when dealing with possessory titles because of the uncertainty surrounding ownership. Some may decline the mortgage outright, while others might impose additional conditions, such as requiring indemnity insurance or legal undertakings.

If you are buying with cash, you will have more flexibility, but you must still consider the future resale potential of the property and how the possessory status could affect your investment.

Can possessory title be upgraded to absolute title?

Yes, and this is often the long-term goal. After a period of 12 years of unchallenged ownership, you can apply to the Land Registry to have the possessory title upgraded to absolute. This requires evidence that no one else has disputed your ownership during that time and that you have maintained possession of the property.

Your solicitor can assist with this application, which removes the uncertainty and makes the title equivalent to standard ownership, significantly improving the property's legal status and marketability.

Risks and pitfalls

The primary risk is that someone with a better title claim could emerge and challenge your ownership. If they succeed, you could lose the property entirely or have to pay compensation. While this is rare, especially when the property has been in use for many years, it is not impossible.

Another key risk is that buyers and lenders may be put off by the uncertain status, making the property harder to sell or refinance. In addition, possessory title does not always include the full extent of rights usually associated with property ownership, such as rights of way or boundary clarity.

How to protect yourself

If you are considering buying a house with possessory title, always instruct an experienced conveyancing solicitor to examine the title and advise you on the associated risks. You should also take out indemnity insurance, which provides financial cover in the event of a successful challenge to your ownership.

Ask whether the seller has already begun or completed the process of upgrading the title. If the property has been held under possessory title for several years, you may be able to apply for an upgrade at the time of purchase, which can increase your security and resale value.

Your solicitor should also conduct thorough due diligence on boundaries, rights of access and any existing use of the land, especially in rural or undeveloped locations where ownership lines are less defined.

Conclusion

Buying a house with a possessory title is possible but requires careful consideration. It may represent a good opportunity, especially if the price reflects the title status, but it comes with added legal complexity and potential risk. Always seek legal advice, consider indemnity insurance and understand whether the title can be upgraded in future. With the right precautions, it may be a worthwhile investment, but it is not a decision to take lightly.