Estate rentcharge

livm

Hi
i wondered what experience anyone might have with a rentcharge on a Bloor homes property (freehold)? I am purchasing a house on a Bloor estate second hand and my solicitor has raised the term as an issue saying she cannot sign the mortgage deed to say the property is mortgageable without a deed of variation from them! But my mortgage advisor, the estate agent plus a couple of other people I know on the same estate have said it’s not an issue. I understand basically what an estate rentcharge is and the issues surrounding it that are a hot topic right now, but I don’t want to be made into case law for my solicitor just to make a point, so I wondered if someone could give me some advise on dealing with it with Bloor Homes specifically?!

TIA

nyermen

I can't comment on experience, it sounds like you've read some of the other threads.  
The big thing in my mind is that an estate rent charge is not subject to the new legislation coming out regarding old rent charges.  Estate rent charges will continue, and have the same conditions as old rent charges (failure to pay in x days = lease being awarded to debtor, and basically you have no home for 99 years etc).  That is what the mortgage company is worried about, failure to pay it and you'd might as well default, leaving them with a worthless asset.
You're paying your solicitor for their best advice - I would listen carefully to them understand the implications etc. I presume they're also "acting on behalf of your mortgage company" (my solicitor was able to, and he did due diligence accordingly).
Please don't listen to the estate agent (who is paid to help the vendor not you). Also, who did the other people you know use?  They may have used the bloor homes "recommended solicitor" who will have said no problem (surprise surprise).

Personally, I don't believe Estate rent charges are a killer (depending on the underlying conditions of the actual charges - inflation / doubling / etc), but I think they're unnecessary fuss and so I don't really trust the builders themselves. This approach never used to exist - I get that councils aren't adopting roads these days, but there are other ways to do it (management company owned by all, etc), just they don't give the builders as much $$$.

livm

Thanks nyermen all very useful. Interestingly, there IS a management company which everyone on the estate has a share in, so I will once I own. So this is my confusion; why have that plus a rentcharge?! Surely it’s just a management charge?!🤷🏻‍♀️

RelievedSheff

nyermen said:

I can't comment on experience, it sounds like you've read some of the other threads.  
The big thing in my mind is that an estate rent charge is not subject to the new legislation coming out regarding old rent charges.  Estate rent charges will continue, and have the same conditions as old rent charges (failure to pay in x days = lease being awarded to debtor, and basically you have no home for 99 years etc).  That is what the mortgage company is worried about, failure to pay it and you'd might as well default, leaving them with a worthless asset.
You're paying your solicitor for their best advice - I would listen carefully to them understand the implications etc. I presume they're also "acting on behalf of your mortgage company" (my solicitor was able to, and he did due diligence accordingly).
Please don't listen to the estate agent (who is paid to help the vendor not you). Also, who did the other people you know use?  They may have used the bloor homes "recommended solicitor" who will have said no problem (surprise surprise).

Personally, I don't believe Estate rent charges are a killer (depending on the underlying conditions of the actual charges - inflation / doubling / etc), but I think they're unnecessary fuss and so I don't really trust the builders themselves. This approach never used to exist - I get that councils aren't adopting roads these days, but there are other ways to do it (management company owned by all, etc), just they don't give the builders as much $$$.

It isn't the roads that don't get adopted. Most roads do apart from shared private driveways which are not constructed to adoptable standards. It is very rare for a developer not to aim to have the estate roads adopted under an S38 agreement with the council.

The "estate charges" relate to areas of public open space, green spaces and shared areas that require upkeep. The councils don't tend to adopt these anymore due to budget cuts. I say don't tend too as we fell lucky last year when we bought a new build house on an estate with lots of green spaces. Our local authority Bassetlaw have adopted all of the green spaces of which there are many so we have no estate charges to pay at all. But this is highly unusual.

daveyjp

livm said:

Thanks nyermen all very useful. Interestingly, there IS a management company which everyone on the estate has a share in, so I will once I own. So this is my confusion; why have that plus a rentcharge?! Surely it’s just a management charge?!🤷🏻‍♀️

Rent charge is merely the mechanism for securing the common area payments contribution. 

IMHO its draconian.  

RelievedSheff

daveyjp said:

livm said:

Thanks nyermen all very useful. Interestingly, there IS a management company which everyone on the estate has a share in, so I will once I own. So this is my confusion; why have that plus a rentcharge?! Surely it’s just a management charge?!🤷🏻‍♀️

Rent charge is merely the mechanism for securing the common area payments contribution. 

IMHO its draconian.  

The other option of course is to just not have those areas maintained and leave them to go feral.

Planning insists on new estates having green spaces for the use of the future residents and to break up the developments. Someone has to pay for their upkeep and with reduced budgets most councils simply can not afford to do so.

livm

RelievedSheff said:

daveyjp said:

livm said:

Thanks nyermen all very useful. Interestingly, there IS a management company which everyone on the estate has a share in, so I will once I own. So this is my confusion; why have that plus a rentcharge?! Surely it’s just a management charge?!🤷🏻‍♀️

Rent charge is merely the mechanism for securing the common area payments contribution. 

IMHO its draconian.  

The other option of course is to just not have those areas maintained and leave them to go feral.

Planning insists on new estates having green spaces for the use of the future residents and to break up the developments. Someone has to pay for their upkeep and with reduced budgets most councils simply can not afford to do so.

I don’t mind paying for open spaces at all... the one on the estate where I’m buying is opposite the house so it’s fab that the kids can go and play on it safely when the gardens on these estates are quite small! It’s more that I am concerned that my solicitor is telling me the terminology means that if it is unpaid for a length of time, they could at any time effectively put a mortgage on the land. Now I’m not intending not to pay it but if it makes it harder to sell do I want to buy?! But all new build estates seem to have these so I can’t understand how people have got round it in other situations!🤷🏻‍♀️

withaspritz

Ask the solicitor what is concerning to them about the Estate Rentcharge, is it the general existence, the current amount or the propensity for increasing (by RPI, or uncapped)?  They should be able to give you information on what the problem is specifically as that would be what would be contained in their deed of variation (which is highly unlikely to be permitted by the Rentcharge Owner and thus will likely result in the sale falling through)