"Reservation of a rentcharge" on Title Register.

Troy_af

Hello All.

I am in the process of buying a home in a new development, which is not yet finished. The property is around 1.5 years old. Having looked at the registered title I have picked up on the following in the charges register:

"The Transfer dated 29 April 2015 referred to in the Property Register contains a reservation of a rentcharge as therein mentioned"

"A Transfer of the land in this title dated XXX made between (1) XXX (2) XXX contains a reservation of a rentcharge as therein mentioned." (This one is the transfer from the developer to the current owner).

I believe this is probably referring to the estate charge to maintain the estate once it is complete. I have tried doing a little research on this and found some very worrying information regarding rentcharges on new build estates, problems with getting a mortgage/resale in the future etc. I am looking for some advice on whether or not this is something to be concerned over and if anyone has seen this before? I have only seen examples online from people who have a rentcharge/estate charge on their home when the estate is complete and the terms of the charge is written into the deeds (costs/who the charge is paid, etc). I have not seen a case like mine where the rent charge is not currently in place and instead "reserved" with no other information.

I am assuming this is something my conveyancer will pick up on when they give me their report on searches, which I am still waiting on. But since having seen a few cases online of people who have actually pulled out of a house purchase due to an estate rentcharge, this has caused me to worry a little. There is also lot of conflicting information out there. The main one to me being how there are tons of articles online stating that you will may struggle to find a mortgage on these houses etc, yet all of these houses on these new estates are currently mortgaged and more and more of them are being built and sold every year.

Thanks for any advice.

Flugelhorn

some of these charges only come into play when the property is taken over a by a management company - one near me is still waiting and 10 years on the developer is reluctantly doing the required maintenance, no-one has paid a bean but will have to soon

we had a charge like this when we bought a property and vendors sols arranged deed of variation which our sols were happy with and it is registered with the LR  - seems to be fairly standard practice now 

Troy_af

Flugelhorn said:

some of these charges only come into play when the property is taken over a by a management company - one near me is still waiting and 10 years on the developer is reluctantly doing the required maintenance, no-one has paid a bean but will have to soon

we had a charge like this when we bought a property and vendors sols arranged deed of variation which our sols were happy with and it is registered with the LR  - seems to be fairly standard practice now 

Yes I have heard the same, the charges wont be in place until the estate in finished and the management company take over. I am indeed hoping that a deed of variation is standard practice now, given the amount of homes being built with these charges, but I would like to be more sure before I go ahead with the purchase. With the property you bought was it an estate rent charge that you had? My only concern with estate rent charges is that surely all of the homes on that estate would have to have the same deed of variation, making it a lot harder to get accepted?

Thanks.

Troy_af

AFF8879 said:

Anything you buy nowadays from new will have wording in the contract to say the draconian remedies you’ve read about for non-payment of estate charges are “expressly excluded”, otherwise nobody would be able to get mortgages. I would have thought this would also be true for something built 1.5 years ago, as lenders wised up to these estate charge remedies long before that, but of course you should check your docs to confirm.

Which docs? The transfer deed does not currently state anything other than that there is a reservation of a rentcharge. Since it is not in place yet I'm not sure if there is any way that I can be sure of what the wording in the contract will be when it actually comes into force?

Thanks.

eddddy

Troy_af said:

Which docs? The transfer deed does not currently state anything other than that there is a reservation of a rentcharge. Since it is not in place yet I'm not sure if there is any way that I can be sure of what the wording in the contract will be when it actually comes into force?

Thanks.

In simple terms, the 'contract will come into force' immediately when you buy the property.

As part of the purchase, you'll typically have to sign a deed with the management company agreeing to pay the estate rent charge, and stating what that covers (e.g. cost of maintaining roads, street lights, open spaces etc.)

Obviously, you'll have the opportunity to read it, and if you don't like the content - you can walk-away from the purchase.

The deed (or contract) will 'come into force' straight away when you complete - i.e. you will be bound by whatever the deed says.


But maybe the deed says you don't have to pay anything until the entire development is complete - or maybe it doesn't. You'll need to read the deed to find out.


(FWIW, the person selling the house would have had to sign the same deed wording when they bought their house 1.5 years ago.)

Troy_af

eddddy said:

Troy_af said:

Which docs? The transfer deed does not currently state anything other than that there is a reservation of a rentcharge. Since it is not in place yet I'm not sure if there is any way that I can be sure of what the wording in the contract will be when it actually comes into force?

Thanks.

In simple terms, the 'contract will come into force' immediately when you buy the property.

As part of the purchase, you'll typically have to sign a deed with the management company agreeing to pay the estate rent charge, and stating what that covers (e.g. cost of maintaining roads, street lights, open spaces etc.)

Obviously, you'll have the opportunity to read it, and if you don't like the content - you can walk-away from the purchase.

The deed (or contract) will 'come into force' straight away when you complete - i.e. you will be bound by whatever the deed says.


But maybe the deed says you don't have to pay anything until the entire development is complete - or maybe it doesn't. You'll need to read the deed to find out.


(FWIW, the person selling the house would have had to sign the same deed wording when they bought their house 1.5 years ago.)

Thanks for the reply.

By the deed do you mean that title register for the property or something different? I have read the title register and it doesn't mention anything other than there is a reservation of a rentcharge. As of yet I haven't received any other documents relating to this, other than on the property information form where the seller simply said "no fees yet until the estate is finished".

Flugelhorn

Troy_af said:

Flugelhorn said:

some of these charges only come into play when the property is taken over a by a management company - one near me is still waiting and 10 years on the developer is reluctantly doing the required maintenance, no-one has paid a bean but will have to soon

we had a charge like this when we bought a property and vendors sols arranged deed of variation which our sols were happy with and it is registered with the LR  - seems to be fairly standard practice now 

Yes I have heard the same, the charges wont be in place until the estate in finished and the management company take over. I am indeed hoping that a deed of variation is standard practice now, given the amount of homes being built with these charges, but I would like to be more sure before I go ahead with the purchase. With the property you bought was it an estate rent charge that you had? My only concern with estate rent charges is that surely all of the homes on that estate would have to have the same deed of variation, making it a lot harder to get accepted?

Thanks.

I am sure they are all basically the same, my sol reckoned they sent it out v readily - most people only have them done when they buy / sell

eddddy

Troy_af said:

By the deed do you mean that title register for the property or something different? I have read the title register and it doesn't mention anything other than there is a reservation of a rentcharge. As of yet I haven't received any other documents relating to this, other than on the property information form where the seller simply said "no fees yet until the estate is finished".

Here's a random example of a rent charge deed: https://www.ashford.gov.uk/media/vnibf4yu/chilmington-green-rentcharge-deed-2021-edition.pdf


That's the kind of document you'll probably have to sign when you purchase - but obviously, the content of yours could be significantly different.

Your deed might (or might not) say words to the effect of "no fees yet until the estate is finished" - you (and/or your solicitor) will need to read it to find out.

Troy_af

eddddy said:

Troy_af said:

By the deed do you mean that title register for the property or something different? I have read the title register and it doesn't mention anything other than there is a reservation of a rentcharge. As of yet I haven't received any other documents relating to this, other than on the property information form where the seller simply said "no fees yet until the estate is finished".

Here's a random example of a rent charge deed: https://www.ashford.gov.uk/media/vnibf4yu/chilmington-green-rentcharge-deed-2021-edition.pdf


That's the kind of document you'll probably have to sign when you purchase - but obviously, the content of yours could be significantly different.

Your deed might (or might not) say words to the effect of "no fees yet until the estate is finished" - you (and/or your solicitor) will need to read it to find out.

Hello.

So 6 weeks later I have still not received any rentcharge deed or any documents for that matter. We are waiting on a management pack, which I'm assuming will contain the information on the rentcharge?

However I have been given a deed of covenant to sign and return which by the looks of it is basically an agreement for me to sign to say I will observe covenants and pay the reasonable cost of the company.

What I don't understand is how I have been given this deed of covenant to sign without yet having seen the deed (and I don't think my solicitor has yet either). So how do I even know what it is I am signing for?

user1977

Troy_af said:

eddddy said:

Troy_af said:

By the deed do you mean that title register for the property or something different? I have read the title register and it doesn't mention anything other than there is a reservation of a rentcharge. As of yet I haven't received any other documents relating to this, other than on the property information form where the seller simply said "no fees yet until the estate is finished".

Here's a random example of a rent charge deed: https://www.ashford.gov.uk/media/vnibf4yu/chilmington-green-rentcharge-deed-2021-edition.pdf


That's the kind of document you'll probably have to sign when you purchase - but obviously, the content of yours could be significantly different.

Your deed might (or might not) say words to the effect of "no fees yet until the estate is finished" - you (and/or your solicitor) will need to read it to find out.

Hello.

So 6 weeks later I have still not received any rentcharge deed or any documents for that matter. We are waiting on a management pack, which I'm assuming will contain the information on the rentcharge?

However I have been given a deed of covenant to sign and return which by the looks of it is basically an agreement for me to sign to say I will observe covenants and pay the reasonable cost of the company.

What I don't understand is how I have been given this deed of covenant to sign without yet having seen the deed (and I don't think my solicitor has yet either). So how do I even know what it is I am signing for?

Doesn't matter how far in advance you sign. You're not committed to anything until you tell your solicitor you're happy to be so. No harm in letting them have the signed docs ready.

canaldumidi

Troy_af said:

....

"The Transfer dated 29 April 2015 referred to in the Property Register contains a reservation of a rentcharge as therein mentioned"

"A Transfer of the land in this title dated XXX made between (1) XXX (2) XXX contains a reservation of a rentcharge as therein mentioned." (This one is the transfer from the developer to the current owner).

To find out exactly what this means you will need to read the "Transfer dated 29 April 2015". At some point your solicitor will send you a copy, possibly with an explanation.

Alternatively, for £7, you could request a copy from the Land Registry using Form OC2.

As for

Troy_af said:

.

However I have been given a deed of covenant to sign and return which by the looks of it is basically an agreement for me to sign to say I will observe covenants and pay the reasonable cost of the company.

What I don't understand is how I have been given this deed of covenant to sign without yet having seen the deed (and I don't think my solicitor has yet either). So how do I even know what it is I am signing for?

Signing now commits you tonothing. It's just one more task ticked off in preparation for Exchanging Contracts. You can instruct your solicitor not to Exchange at any point up till he actully Exchanges - and he'll contact you to confirm before he does so anyway.