Estate rent charge vs Rent charge

HeyAnon123

Can anyone please explain the difference between the two?

TIA

DullGreyGuy

Do you want to give a bit more context?

Are you the tenant or landlord? What's the issue you are trying to work out?

HeyAnon123

DullGreyGuy said:

Do you want to give a bit more context?

Are you the tenant or landlord? What's the issue you are trying to work out?

Yes, I am in the process of buying a house. It is freehold with a rent charge of £5pa. My solicitors have messed up somehow, not notifying our lender (Halifax) that the property has this rent charge until we were about to exchange contracts. Sol has since asked collector for DoV which they turned down and suggested sellers get indemnity policy. Halifax have said if the charge is a 'rent charge' and not an 'estate rent charge' they would accept the indemnity policy and we could then go forward and exchange contracts. Solicitor somehow is unsure which it is

So I was wondering if anyone could explain the difference between the two to me, as I can not find much online.

HeyAnon123

Also, may I add that on land registry, it states 'rent charge'.

Would land registry specify an estate rent charge or would they both fall under the same bracket of rent charge?

Gentoo365

HeyAnon123 said:

DullGreyGuy said:

Do you want to give a bit more context?

Are you the tenant or landlord? What's the issue you are trying to work out?

Yes, I am in the process of buying a house. It is freehold with a rent charge of £5pa. My solicitors have messed up somehow, not notifying our lender (Halifax) that the property has this rent charge until we were about to exchange contracts. Sol has since asked collector for DoV which they turned down and suggested sellers get indemnity policy. Halifax have said if the charge is a 'rent charge' and not an 'estate rent charge' they would accept the indemnity policy and we could then go forward and exchange contracts. Solicitor somehow is unsure which it is

So I was wondering if anyone could explain the difference between the two to me, as I can not find much online.

There seems to be some confusion here as both can be 'rent charges'.

The difference in treatment depends on if it is some amount paid to a previous landowner or similar (e.g. like a kind of ground rent) for which you get nothing except the right to have a properly on the land. Or if it's a kind of service charge to pay for things the council have not adopted (or don't maintain). Like roads, parking and verges on a new build estate.

If it's the second you would be aware of a service charge, and I don't think an indemnity policy is useful at all. What the lender would want is for the management company to confirm they will not make use of their statutory rights to turn your freehold into a leasehold if you are late in paying your service charge. 

What surprises me is that Halifax care, I thought they were fine with 'estate rent charges' that are for maintenance of the grounds.

Gentoo365

.. removed as it is irrelevant and could cause confusion. Clarified in post below.

Gentoo365

HeyAnon123 said:

Also, may I add that on land registry, it states 'rent charge'.

Would land registry specify an estate rent charge or would they both fall under the same bracket of rent charge?

Have the solicitors provided the title report? That should include the information you need. 

Is the payment for maintenance of grounds (a kind of service charge), or is it paid purely for the use of the land?.

Edit: missed the amount. £5 per annum.

This is obviously not a service charge. So this is unlikely to be an estate rent charge. Indemnity is probably the way to go. 

I think you will be fine. Just annoying it wasn't sorted earlier.

But just because I could.be wrong here is a link to a solicitor blog post from a few years ago:

https://www.johnhodge.co.uk/site/blog/conveyancing/rentcharges-what-are-they-and-how-might-they-affect-you

HeyAnon123

Thank you everyone for your replies. Yes the solicitor has double checked and it is definitely rent charge, which halifax are happy with, even without an indemnity policy taken out which did surprise me.

So now finally we can get the exchange done and hopefully complete in the next few weeks 🤩

BarelySentientAI

HeyAnon123 said:

Thank you everyone for your replies. Yes the solicitor has double checked and it is definitely rent charge, which halifax are happy with, even without an indemnity policy taken out which did surprise me.

So now finally we can get the exchange done and hopefully complete in the next few weeks 🤩

Good news!