There have been many recent horror stories of property owners facing demands of extortionate admin fees in relation to Rentcharges and cases where the companies behind the charges have offered them for sale in excess of £1,000. The question is therefore what are Rentcharges and is there anything that property owners can do to protect themselves?
Rentcharges originated in the early part of the last century. They were created to enable builders to develop land without actually paying anything to the land owner, in return for an income from the owners (and subsequent owners) of the new houses.
The good news is that the 1977 Rentcharge Act abolished the creation of any new Rentcharges (subject to limited exceptions). It also capped the term of existing Rentcharges to 60 years, effectively creating an end to all Rentcharges by 2037.
Despite the similar terminology, a rentcharge is nothing to do with a lease.
Well if your property is encumbered by a Rentcharge and you do not want to keep making payments for the next 20 years there is another option:-
The existence of a Rentcharge does not make your property unsellable but it may deter some purchasers or make them a little nervous of proceeding. We advise that you take the following steps before placing your property on the market:-
Many Rentcharges have been taken over by investment companies over the years. You may ask how a return of between £2 and £10 per property year per property is a valuable investment! The answer is that whilst the Rentcharge itself is regulated and cannot be increased, the fees associated with them are not regulated. Be aware of the potential pitfalls:-
If you have a Rentcharge on your property and you would like our assistance in redeeming this, please contact Sarah Sargent.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.