Rentcharge on Freehold

Tsj90s

Hi all, FTB here, be kind.... 
I know these questions are really for my solicitor but typically I've started thinking about them after 5pm on a friday.
The house I'm buying has an £8 per year rentcharge. From what I understand it's not asked for you just have to pay it, and if it's late by over 45 days they can apply for leasehold on the property. My solicitor said its perpetual so never ending. I was just wondering do they have any other rights to the house/land? There is covenants on the property but just regarding machinery and doing building beyond the building lines etc, Could they apply for leasehold whenever they want? 
Is there a way of getting rid of it? (I know it's only 8 pounds a year but just curious)

Notnewnotold

I'm guessing it's a really old one - maybe to the local council?

There is a statutory process where rentcharges can be redeemed for a multiple of the annual cost. Alternatively, all rentcharges will be cancelled out after 2037 so up to you if you want to go through the process or not (which I started looking at but found a bit fiddly as you have to track down the original rentcharge deed).

There have been some horror stories about leases getting created, however I believe these are from opportunistic private rentcharge holders - the ancient ones owed to councils seem to be less of an issue, although I'm not an expert...

Tsj90s

Notnewnotold said:

I'm guessing it's a really old one - maybe to the local council?

There is a statutory process where rentcharges can be redeemed for a multiple of the annual cost. Alternatively, all rentcharges will be cancelled out after 2037 so up to you if you want to go through the process or not (which I started looking at but found a bit fiddly as you have to track down the original rentcharge deed).

There have been some horror stories about leases getting created, however I believe these are from opportunistic private rentcharge holders - the ancient ones owed to councils seem to be less of an issue, although I'm not an expert...

Thanks for your reply, it says on the official registry of title "The Land is subject to a perpetual yearly rent charge of £8.00 by a transger dated 1961 made between George Wimpey and Co Limited + (two individuals names)". So not sure it is the council...My solicitor did mention on the document about redeeming, I'll ask him about it on monday.. do you know how likely it is they could get a lease granted if they wanted too?

Notnewnotold

As long as it's paid, there is no possibility of a lease being granted... although I'm not an expert so talk to your solicitor. It sounds as though redeeming might be sensible if just for peace of mind. The only one I've come across was a lot lot older than 1961!

rainbow_fountains

You can apply to redeem the rentcharge, info here: https://www.gov.uk/guidance/rentcharges#how-to-redeem-your-rentcharge

To answer your question, it is rare that leaseholds are placed on freehold over unpaid rentcharges, it does happen but it’s very rare (if it happened with any frequency then banks just wouldn’t lend to these types of properties).

I’d look at getting it removed for your own peace of mind, the fact that you’re even aware of it is a good sign - most of the ones who end up in trouble are the ones who didn’t even know the rentcharge existed.

I’ll be honest, personally this puts me off buying a property, as do freeholds with shared grounds and maintenance charges (currently unregulated so uncapped), but I also wouldn’t buy a leasehold flat for the same reason but plenty of people do and have no issues.

Tsj90s

rainbow_fountains said:

You can apply to redeem the rentcharge, info here: https://www.gov.uk/guidance/rentcharges#how-to-redeem-your-rentcharge

To answer your question, it is rare that leaseholds are placed on freehold over unpaid rentcharges, it does happen but it’s very rare (if it happened with any frequency then banks just wouldn’t lend to these types of properties).

I’d look at getting it removed for your own peace of mind, the fact that you’re even aware of it is a good sign - most of the ones who end up in trouble are the ones who didn’t even know the rentcharge existed.

I’ll be honest, personally this puts me off buying a property, as do freeholds with shared grounds and maintenance charges (currently unregulated so uncapped), but I also wouldn’t buy a leasehold flat for the same reason but plenty of people do and have no issues.

Thanks so much, I may well look into redeeming it for my own piece of mind. My solicitor has asked for proof the rent charge is up to date, if no receipt available hes asked for it in writing from the people who manage the rentcharge. Can I ask why it would put you off given as long as its paid it's not really an issue? (Will just have to put it in big writing on a calender for reminding me🤣)

rainbow_fountains

Tsj90s said:

Thanks so much, I may well look into redeeming it for my own piece of mind. My solicitor has asked for proof the rent charge is up to date, if no receipt available hes asked for it in writing from the people who manage the rentcharge. Can I ask why it would put you off given as long as its paid it's not really an issue? (Will just have to put it in big writing on a calender for reminding me🤣)

Sure, basically I just don’t like someone else having any control over my property, and in particular not having any protection if said person decides to screw me over. There have been a few instances, I remember a news report a couple of years ago about some retirement properties, that were only a few years old, and the management company out of the blue demanded £13,000 from EACH resident for “painting and drain pipes”. As there are currently no legal protections for freeholders (unlike leaseholders, who can appeal unreasonable fees to a tribunal) the residents had no choice (most of them were elderly and disabled). Not only did the cost not reflect the work at all, but the houses didn’t even need repainting or new drain pipes, it was all a sham.


I also take issue with ‘unadopted’ estates (estates where the communal areas, including the road are managed by a private company and not the local council). Residents of these estates have to pay full council tax plus an additional service charge to maintain their roads, lamppost etc (stuff the council would usually do) and stuff like grounds and parks, BUT these are not private estates, the public has full access to them and can vandalise them etc and the residents have to foot the bill. It feels like paying double council tax. There’s also many complaints from these residents as the service charges they pay rarely result in work being done, so they often live in rundown damaged estates paying huge fees with sod all they can do about it. Much like the tripling ground rent scandal this is just another way for greedy developers to make money, it will be the next big housing scandal in the news IMO.

I totally get the need for 3rd party management companies and service charges in properties that share a building like flats, but for freehold houses there is absolutely no need ever. I think it should be the law that local council have to adopt all estates, at the moment the system is ‘have your cake and eat it’ as the council gets to claim full council tax off these residents while not actually maintaining their estates for them like they do with everybody else.

TL;DR It’s not just the draconian estate rent charges that I take issue with, it’s the management company service charges (effectively like uncapped extra council tax, but for little in return) I also can’t stand. If I’m buying a freehold property then all I should owe are my mortgage payments and my council tax, and that’s it. That’s what most other people have, so why are some newer estates different? Developer’s greed. That’s all. If you’re interested in learning more checkout this group: https://www.homeownersrights.net/

NameUnavailable

rainbow_fountains said:

Tsj90s said:

Thanks so much, I may well look into redeeming it for my own piece of mind. My solicitor has asked for proof the rent charge is up to date, if no receipt available hes asked for it in writing from the people who manage the rentcharge. Can I ask why it would put you off given as long as its paid it's not really an issue? (Will just have to put it in big writing on a calender for reminding me🤣)

Sure, basically I just don’t like someone else having any control over my property, and in particular not having any protection if said person decides to screw me over. There have been a few instances, I remember a news report a couple of years ago about some retirement properties, that were only a few years old, and the management company out of the blue demanded £13,000 from EACH resident for “painting and drain pipes”. As there are currently no legal protections for freeholders (unlike leaseholders, who can appeal unreasonable fees to a tribunal) the residents had no choice (most of them were elderly and disabled). Not only did the cost not reflect the work at all, but the houses didn’t even need repainting or new drain pipes, it was all a sham.

Leaseholders do have the option of going to tribunal but let me tell you from personal experience, it's really something to consider as a last resort. The costs to actually go through with it are high (no you don't need legal representation but you won't be taken seriously without it and are very likely to slip up over some minor technicality in the legal process). You need to prove your case, which involves getting 'expert opinions' which can cost significant amounts.

Even if you 'win' your case you will still be liable for the charges the tribunal deems reasonable and on top of that you may also be liable to pay for your freeholders legal costs as well as your own.

In many cases it's better to let the freeholder just screw you over!