Buying a house with estate rentcharge

fizzysage

Hi all, we're about to buy a house with an estate rentcharge (it's freehold but you pay service charge towards maintaining roads, landscaping etc as it's unadopted by the council).

We're in the process of getting a deed of variation issued to remove the ability to put a lease or reclaim the property in the event of non payment but I'm concerned there will be other gotcha clauses in the transfer or some other archaic law that will surface and make this house unsellable, losing all its value and thus all our life's savings.

Would you buy a property like this? Or if you live in one with an estate rentcharge would you caution against or support it??

Just don't want to make a huge mistake. Any words of wisdom, support or advice would be truly appreciated.

rachel230

As the council is not adopting  you will be paying both normal council tax plus the estate maintenance charge (are any parts of your estate e.g. roads open to the general public?)
Estate charges are generally unregulated and uncapped and can rise steeply over the years.

daveyjp

Rent charges have been described in Court as 'draconian'.

Even with a deed of variation you are entering into largely unregulated waters.

I could possibly accept some charges for grass cutting etc, but for maintenance of roads and probably the drainage below no way.

Developers can get away with sub standard highway construction if roads and drains aren't built to adoptable standards.

GDB2222

The trouble is that many (perhaps most) new estates are not being adopted by the councils. So, if you buy a new build, or a newish build, you will probably be paying for estate maintenance. 

Rentcharges are a ridiculous sledgehammer to crack the nut of making it easy to collect the estate maintenance costs. But, they have become extremely common. 

People complain like crazy about the estate maintenance costs, but nobody on this forum seems to be paying over £500 a year, or so. 

princeofpounds

daveyjp said:

Rent charges have been described in Court as 'draconian'.

That's not quite the full story. What was described as draconian was the powers of re-entry and forfeiture under Section 121 of the Land & Property Act 1925 - basically the rentcharge holder can sell a lease on your property to recoup arrears.

Historically few people thought that could ever be exercised so it wasn't an issue for decades and decades. Then a test case in 2016 decided that they could be. The judge said that such powers were draconian but lawful as the law stands.

The deed of variation addresses this problem. Doesn't stop the risk of poor management however, like any collective maintenance scheme.

Personally I think it's very wrong that local authorities are refusing to adopt the basic infrastructure on new developments; they are trying to have their council tax cake and eat it. But that's what they are choosing to do.

Would I buy a property with an estate rentcharge? Yes, with the necessary deed of variation. There is also the simmering issue of rentcharge caps (or the lack of them) that may become a bigger deal in future, but so many houses could be affected by that I suspect a solution will be agreed or legislated.

 

Flugelhorn

Ours is about £220 a year and we got a Deed of Variation drawn up, just about everyone buying and selling on the estate does that now

emamahmed

Flugelhorn said:

Ours is about £220 a year and we got a Deed of Variation drawn up, just about everyone buying and selling on the estate does that now

My sols is asking for Deed of Variation or Indemnity insurance, if indemnity insurance will this effect me selling later on?
How long does deed of variation take? 

wilfred30

I bought my (then) new build freehold house 5 years ago which is also subject to the estate rent charge.

Does anyone know if it's possible to get a Deed of Variation removing the repossession clause years after buying or did it need to be done at the time of purchase?