Investment: Land Boundaries

A new law is putting an end to squatters' rights. Chris Partridge investigates

Later this year will see the end, for practical purposes, of squatters' rights - the ability to gain legal ownership of land simply by occupying it. Known as "adverse possession", squatters' rights are obtained by openly using land as if it was yours for a period of 12 years without the legal owner's permission. Generations of householders have used adverse possession to extend their properties over adjacent scrubland, fields and road verges.

The law has just changed, however, making squatters' rights much more difficult to establish. Under the Land Registration Act 2002, an application to register must be made in 10 years, whereupon the Land Registry notifies the legal owner, who has two years to heave the squatter out before adverse possession is granted.

David Powell, vice-chairman of the land surveying group of the Royal Institute of Chartered Surveyors, was a member of the group that devised the new rules. He believes squatters' rights will be killed off by the new Act, to be replaced by negotiation between parties.

"The gut feeling on the committee was that it will be almost the end of adverse possession, but that the owner will either give or sell the area to the squatter once the situation is made clear," Powell says.

If the squatter has used the land for 10 years without the owner noticing, it is unlikely they will value it highly, but land ownership seems to raise passions usually seen in tigers protecting their territories.

Powell hopes the change will see negotiation replacing confrontation. "I always advise people to talk about it and compromise, because if you do end up in court, it rapidly costs huge amounts of money."

There is one group of owners of land still vulnerable to claims of squatters' rights, and that includes some of the great estates of England and Wales. A small number of squatters on unregistered land who have already built up 12 years' occupation have until October to register their claims.

"Of the 21 million properties in England and Wales, about three million are unregistered, which tend to be huge landed estates," Powell says. The bigger the estate, the more likely it is that obscure corners have been colonised.

The new law will go a long way towards negating the original aim of adverse possession, which was to bring land forgotten or abandoned by its legal owners back into use, says Roger Blake, land and new homes manager of John D Wood. "A lot of people think it is some ancient law, but it was introduced by statute in 1925 with the aim of clearing up hundreds of sterile plots of land and bringing them into productive ownership."

Curiously, obtaining squatters' rights seems to be something of a hobby among estate agents. "I am doing it at the moment with a small piece of land at the side of a bigger plot in my possession," Blake says.

Tom Tangney of Knight Frank has a house in Esher, Surrey, with a back garden that used to belong to the neighbouring golf course. The golfers had clearly forgotten about it because it was an area of scrub behind a thick copse, which had been unmown for decades.

"The previous owner and some neighbours fenced it in and divided it between them. Eventually they applied to register it and the golf course had to abandon all claim," Tangney says.

Often a householder will move before building up the full period of adverse possession, but the accumulated period is usually transferable to the new owner.

Even though the enclosed land is not technically owned by the "squatter" until it is registered in their name, the potential still adds value, says Hugo Headlam of John D Wood in Wandsworth. "We had an end-of-terrace house on the market last year and between him and the pub next door there was a plot of land," he says. "One bit the pub had taken for a beer garden and he'd fenced off the bit next to him for a carport. When it was sold it still had four years to go, but it added £20,000 to the value of the property."

Adverse possession does not only apply to open ground. John D Wood recently sold a flat in Morgans Walk, Battersea, where the vendor had enclosed part of the communal hallway with a studwork partition and successfully added a useful area to a flat.