Purchasing a house with a rentcharge

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    Purchasing a house with a rentcharge

    Hello, long time lurker here.

    I'm in the process of buying a property where the title deeds state the land is subject to a yearly rentcharge created by a conveyance in the 1930s. The title deeds and conveyance from the 1930s refer to a named individual. The seller states they are not aware of any demands for the rentcharge, nor have they paid a rentcharge.

    The conveyance has a load of archaic stuff in it, but, the one relevant bit it does have is that it states the land cannot be developed without the permission of the rentcharge owner. We plan to build an extension to the house.

    I am aware that there are small but significant risks associated with buying a property with a rentcharge, especially if this is bought up by an estate management company. and I'm seeking advice and experience from you people around this. Obviously, I am also taking advice from my conveyancer about this, but I always find more minds and viewpoints useful to think around a problem.

    I am aware the options in this scenario are:
    1. Don't buy the house.
    2. Buy the house and redeem the rentcharge via the Rentcharges Unit at the Ministry of Housing (https://www.gov.uk/guidance/rentchar...our-rentcharge).
    3. Buy the house and buy rentcharge indemnity insurance.

    I have some questions -
    (a) Since the rentcharge owner is (apparently) no longer known, I understand that option (2) can't be done. Is this correct, or can the Rentcharges Unit sell me the rentcharge if the owner is unknown?
    (b) If I get insurance, what do I need to be mindful of in the conditions of the insurance? Can anyone recommend an insurance company for this?
    (c) Since a rentcharge is payable whether a demand is received or not, how do I know if an estate management company has bought the rentcharge and expects me to pay it?
    (d) Could planning permission for an extension be refused because of the conveyance if the rentcharge owner is missing?

    Anything else I should be aware of?

    I hope I've given enough info.
    dont fall into the Rentcharge Trap and turn the non payment of a few pounds into a Conveyancing Nightmare.

    #2
    How much is the rent charge [per year ? I think any arrears in payment , can only go back 6 years.

    If you buy the property, then you must terminate the rent charge by paying 16 x the Annual rent to Ministry of Housing. Then you register a copy of the payment certificate with the property title at Land Registry to show the property is no longer under rentcharge.

    Comment


      #3
      Thank you Gordon. I understand you can only redeem the rentcharge with the Ministry of Housing if the rent owner is known. In this case the rent owner is unknown: the current seller has not received any demands and I imagine the people named on the 1930s conveyance are no longer tracable.

      Do you know if you can redeem the rentcharge if the rent owner is not known?

      The rent charge is £7 a year. I am not worried about paying this, nor the cost of redeeming it, I just do not know if I am able to do this.

      Comment


        #4
        Originally posted by Nez View Post
        The conveyance has a load of archaic stuff in it, but, the one relevant bit it does have is that it states the land cannot be developed without the permission of the rentcharge owner. We plan to build an extension to the house.
        You need to check whether the restriction is a restrictive covenant which will survive the redemption of the rent charge.

        It seems that a rentcharge can be adversely possessed if it has not been paid for long enough. Ask your solicitor about this.

        Comment


          #5
          Ah, getting the rentcharge adversely possessed is another option. Would be interested to hear if anyone's managed to do this.

          Comment


            #6
            The legislation refers to it and the Land Registry have a form for it: https://www.gov.uk/government/public...t-of-truth-st2 Obviously you will need to get the seller to make the statement of truth.

            Comment


              #7
              The statement of truth ST2 form does look like a potential solution to this problem.

              Can the seller complete the ST2 and start the process off, the sale to carry on through completion, and the new owner complete any admin involved with ST2?

              Is there a minimum number of years that the rentcharge needs to have not been paid for? I read something about six or ten years somewhere but can't find that info again.

              Comment


                #8
                How you proceed depends on how keen you are to see the rentcharge disposed of. What do you want to achieve?

                If the rentcharge is not registered then the normal period is 12 years.

                Comment


                  #9
                  Is the property freehold or leasehold ?

                  Is the rent charge payable for less than 60 years ?

                  The Ministry of Housing - rent charge team - may be able to answer your questions better than anyone at this forum.

                  Comment


                    #10
                    Stedyjelly - I'm interested in the rentcharge issue in conveyancing .What happened in your case ? Did you go ahead and buy ? Did you go down the adverse possesion route ,indemnity ?

                    Do update if you're still around .

                    Comment


                      #11
                      Here is someone more knowledgeable on rent charge :

                      https://www.burnetts.co.uk/publicati...em-rentcharges

                      Comment

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