Ground Rent on Freehold House

murdoch35

I'm hoping someone can shed a little light on this before I get to speak to my solicitor tomorrow.

I'm nearing the end of the process for purchasing my new home, the seller has text me over the weekend saying that our solicitor has raised an enquiry around ground rent on the property. The seller is unaware of this and has never paid anything in the 4 years she has been at the property. The house is definitely freehold.

I'm worrying as we are hoping to exchange next week and complete the week after, is this likely to hold things up? Does anyone know why there would be ground rent on a Freehold purchase?

moneyistooshorttomention

Is she getting confused maybe with "service charges"?

There might be service charges on a freehold house. If there is - then those charges have to be down there in writing in the original Deeds (or Register entry) stating that a service charge exists and what it is.

I'd check she has used the correct name for any possible charges and then take a look at the Deeds/Register entry to see if anything had been put down there about them.

Mind you - presumably ground rent would also have to be written down in original Deeds (Register) entry - as otherwise it wouldnt be possible for anyone to levy that either.

I would assume that, by definition, if a property was a freehold house then ground rent charges wouldnt apply. A legal bod could confirm on this either way.

G_M

Read the Title document.

Yes, there could be some kindof ground rent (NOT necessarily a service charge which is, by definition, a charge for a service povided).

We recently sold our deceased mother's (freehold) house and discovered there was an annual rent charge of 1/6 (One shilling and sixpence or £0.075 for you young-uns). Mum had never been charged this or paid it, in 20 years.

The buyers raised this and wanted an indemnity insurance to cover the eventuality of a bill being received.

I told our solicitor to refuse because
a) it was not known who would have the right to raise an invoice
b) they were highly unlikely to do so after all this time
c) they could in any event only charge for 7 years arrears
d) the total of 7 years charges was insignificant.

Of course your scenario may be different, and the charge may be greater, but the Title documets will enlighten you

davidmcn

murdoch35 wrote: »

I'm worrying as we are hoping to exchange next week and complete the week after, is this likely to hold things up?

The seller and buyer texting each other with half-understood things might hold things up! I expect your seller has misinterpreted something. Or perhaps there's some all-purpose list of enquiries, which is bound to include items to which the answer is "not applicable".

Does anyone know why there would be ground rent on a Freehold purchase?

There wouldn't be. By its very definition, rent is only associated with a lease.

Mossfarr

My first house was freehold but had a ground rent which I knew nothing about. After being in the house for about six months we received an invoice for the ground rent for ours and five other houses in the terrace (six pounds per house per year). Apparently the owners of our house were responsible for collecting the money from the other houses and paying the bill! I couldn't believe it, I was absolutely horrified at the thought of knocking on peoples doors to collect money. I marched back to the solicitors and insisted that he deal with it as he had not made us aware before we bought the house. His reply was that we should have read the documents (what did I pay him for I wonder)? Anyway, to cut a long story short, each time a bill was received I posted it through the solicitors door. He never paid the bills so when we sold the house two years later (using a different solicitor) I just paid the outstanding bills and put it behind me.
It taught me a good lesson though - NEVER trust a solicitor !! Now I read through everything myself and question everything I don't understand.

Marktheshark

Alarm bells of it has.
These contracts can be sold and ground rents hiked up.

It is either leasehold or freehold and ground rent on a freehold is taking the ****

It is either your house built on your land or it is not and you are buying a pile of bricks built on rented land.

I would want answers and quickly and be prepared to pull out if it is rented land with service charges.

The_Earl_of_Streatham

There might be a rentcharge. The land still belongs to a freeholder but someone else has a right to charge them money. Fairly unlikely, but they have come up on here before.

chrissie83

Our house is freehold but we pay 'chief rent' of £2.50 a year. I still don't really understand what it is I just pay it every year, it caused a lot of confusion when we put our house up for sale

murdoch35

Thanks for you replies, I've spoken with my solicitor and your right it is a 'Rentcharge' or Chief Rent depending on which part of the UK you are in. This charge is apparently quite common in the area i'm moving too as well as Bath and Bristol according to my solicitor.

Solicitor said I can continue to pay the yearly charge (which can never be increased and is only a couple pound per year) or she's advised there's a simple way of having this removed once we've moved in and involves applying to the 'department of communities and local government' and paying a redemption fee of 16x the annual fee.

Apparently all 'rentcharges' become obsolete on the 22nd August 2037 anyway.

G_M

The_Earl_of_Streatham wrote: »

There might be a rentcharge. The land still belongs to a freeholder but someone else has a right to charge them money. Fairly unlikely, but they have come up on here before.

Indeed. As in my case above. It was detailed in a Conveyance of the property dated 1868 when the land was sold by a local country estate - hence the 1/6 fee. This was a fixed fee, so no, it could not be "sold and hiked up" as suggested by mark above.

Rather than panic, read the Title (and/or other document/conveyance) in which this charge is set out, and see what's what. No one here can really help without seeing the paperwork!

edit: cross posted. Glad it's sorted. Panic over.

Just budget for £2.00 pa.........:rotfl:

moneyistooshorttomention

murdoch35 wrote: »

Thanks for you replies, I've spoken with my solicitor and your right it is a 'Rentcharge' or Chief Rent depending on which part of the UK you are in. This charge is apparently quite common in the area i'm moving too as well as Bath and Bristol according to my solicitor.

Solicitor said I can continue to pay the yearly charge (which can never be increased and is only a couple pound per year) or she's advised there's a simple way of having this removed once we've moved in and involves applying to the 'department of communities and local government' and paying a redemption fee of 16x the annual fee.

Apparently all 'rentcharges' become obsolete on the 22nd August 2037 anyway.

Never heard of this personally.

But - if I were told something like that applied to a property then I'd just tell my solicitor "Okay - pay them £2 x 16 and buy it out and that's the end of it". A one-off payment of £32 and that's that and it's a completely standard/normal house is no big deal.

I wouldnt wait for 2037 to remove this anyway. That's still 20 years away and a lot could change before then - the Powers That Be might decide not to bother abolishing it on the one hand or you might decide to sell the house and the next owner queried it too.

Just make that one-off payment and get shot of it.