What is a rentcharge? Commercial property solicitors in Welwyn Garden City

10 Nov Commercial Property Law – What is a rentcharge?

Posted at 00:00h in Commercial Property Law by

If you own or are buying a property with a rentcharge, it is important to understand the implications, says Nick Davies, commercial property solicitor at HRJ Foreman Laws Solicitors.

What is a rentcharge?

A Rentcharge relates to freehold property and should not be confused with ground rent.

In brief, it is an annual sum that needs to paid by the owner of land or property to another person, know as the Rentowner.

The Rentowner  has no other legal interest in the land or property.  It is a way of securing monies from a freehold homeowner, often for the costs of services for common parts in a development.

Usually the payments requested are nominal in amount, but this doesn’t mean they can be ignored.   Often the homeowner will not receive a demand for payment, so may not even be aware of it, until they come to sell the property.

Recovering a rentcharge

There are various remedies such as recovering the debt under a “action for debt”, various statutory remedies and enforcement of covenants to pay the monies under the rentcharge.

The statutory remedies referred to above have been found to be problematic in recent years. They include, under section 121 of the Law of Property Act 1925:

  • right of entry into possession; and
  • grant of a lease of the charged land on trust.

Lenders providing mortgages on those freehold properties do not like these statutory rights because they risk a third party taking interest in the house over which the lender has security.

For that reason in recent years many have had to substitute the previously popular section 121 rights for other remedies such as a restriction on the title of a property preventing sale without those monies being paid or requiring a deed of covenant (a promise by the new owner to observe the requirement to pay) each time a property changes hands.

If there is a rentcharge on your property or you need advice on recovering a rentcharge, contact us:

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