New build freehold - Estate Rentcharge

mat1964

We have had an offer accepted on a Berkeley Homes house on a new build development.   It's not even with solicitors yet and we have until this Wednesday to get our reservation fee (£5k) back in full if we pull out.

I came across an article about risks buying a new build due to a 'Rentcharge' clause in the title deed and how it can seriously affect resale values.  So I downloaded a couple of title deeds from the Land Registry for houses which have already completed on the estate - and they are subject to the Rentcharge clause.

Obviously I will speak to the solicitor tomorrow, but I am wondering if anyone has experience of buying a house with a Rentcharge?  This is really the only place we have found which meet our needs, so don't want to pull out.  On the other hand, this is a fairly small development and I don't want to end up with unlimited charges and the ability of the management company to take back the house if a bill is not paid within 40 days (which is what the Rentcharge can legally lead to).

anselld

One of the many perils of buying a newbuild.  Plenty of people will tell you not to entertain it.  On the other hand the residents need to pay for the upkeep of the estate somehow so if it really is the only place to meet your needs then so be it.

daveyjp

You need independent legal advice so the actual implications can be explained to you.

Use your own solicitor and not one recommended by anyone involved in the development including the selling agent.
 

mat1964

daveyjp said:

You need independent legal advice so the actual implications can be explained to you.

Use your own solicitor and not one recommended by anyone involved in the development including the selling agent.
 

thanks, yes am using an independent solicitor.  I've owned a Berkeley new build before - this was leasehold, so you get more protection, but the property was managed very well.  I'll see what the solicitor says -problem is if we don't cancel by end Weds, we lose £1500 of the reservation fee, and then 2 weeks later another £1000.  I'm visiting the site today, so I'll see if the sales team have any information on this (likely not).

withaspritz

Some new build TP1s have rent charge exclusion clauses, which removes the power to grant a lease over the freehold title in the event of nonpayment of the ERC. Suggest you seek legal advice on the full wording of the deeds not just the rent charge clause as some are worse than others in this regard.

L_T_88

As @withaspritz you need to get a draft transfer and check the wording in relation to rentcharges.
Ours has clauses which exclude the right of re-entry and that they'll notify the lender should be default on the payments.
Is this not something your lender has picked up?

knightstyle

Do not rely on the sales team having the correct information. They only say what they think will persuade you to put down your deposit so they can get their bonus.
Make sure your solicitor asks the right questions and read the answers carefully.
Having said that I think these charges are agood thing, it means the residents pay for grass cutting, litter picking etc. so they have more control and can eventually take over the whole estate and control things like parking.

davidmcn

L_T_88 said:

Is this not something your lender has picked up?

It's only going to be "picked up" by the lender after the solicitor tells them about it, and the OP says solicitors haven't started work yet.

mat1964

davidmcn said:

L_T_88 said:

Is this not something your lender has picked up?

It's only going to be "picked up" by the lender after the solicitor tells them about it, and the OP says solicitors haven't started work yet.

No lender - it's a cash buy/. We went to the site today - the sales lady agreed to extend the deadline for full return of the reservation fee to the end of the week, so that's something.  I will see what the solicitor says tomorrow - I've got the details of the developers solicitors so he can make enquiries even if he's not in receipt of all the documentation.  

NameUnavailable

anselld said:

One of the many perils of buying a newbuild.  Plenty of people will tell you not to entertain it.  On the other hand the residents need to pay for the upkeep of the estate somehow so if it really is the only place to meet your needs then so be it.

Rent charge is different to a management charge (which is for upkeep of communal grounds, private roads etc).

Lenders can ask for an indemnity policy so it shouldn't be a deal breaker (if that's what we are talking about).

SmoggyGoose

Check with the local council if there is an application to adopt the roads. Some developments there will be a charge for a year following completion, after which the roads are adopted by the local council and no charges will apply.