A Bath Conveyancing expert explains why you might have to pay ground-rent on a freehold property?

Over the course of our years of experience in Conveyancing in Bath, we have encountered a number of clients surprised to be charged ground rent on a freehold property.

So why do owners of some freehold houses in the Bath area of North Somerset find they are being asked to pay demands for what looks like a yearly rent?

The answer is usually that these are old 'rentcharges' which were imposed many years ago.

A ‘rentcharge’ is small annual payment which is 'charged' on a freehold property - it is stated to be charged because the person who is entitled to receive the payment can take legal action against the current owner of the property whether that person is aware of the charge or not.

It is not properly speaking a rent and although it has some characteristics of a ground rent the property affected will have a freehold title. The amounts are usually very small, and often are no longer demanded or paid, but mere non-payment for a number of years does not mean that a house-owner cannot be forced to pay arrears.

Rentcharges were typically imposed in the nineteenth or early twentieth centuries, the reason being that they are a legal mechanism to enable the original seller to enforce positive obligations (or covenants) against not only the original buyer but any subsequent owners.

Generally in English law only negative or restrictive covenants can be enforced against the owner for the time being, and then by someone who owns land which can benefit from the covenant, but the imposition of a rentcharge enables its’ owner to enforce positive covenants without continuing to own any adjacent land.

These covenants usually require the house to be maintained in accordance with plans and drawings specified at the time the property was first built, so as to preserve the look of the area and ensure that any new buildings conform to the look of the adjoining properties on the area. This was obviously important in Bath, with its emphasis on preserving the Georgian style of buildings in the city.

Bath Conveyancing Solicitors will be able to check whether there is such a rentcharge on a property, and to advise more fully on its’ effect.

Acting for a buyer they will check whether payments are up-to-date, and make arrangements for any arrears to be paid on completion. If it has not been demanded or paid for many years then it is customary among Conveyancing Solicitors in Bath to deduct six years payment from the purchase money (claims for more than six years rent are statute-barred). If the buyer subsequently receives a demand for payment then they will have effectively received the money from the seller, and should make payment accordingly.

Property owners sometimes receive letters offering them the opportunity to 'buy out' the rentcharge. Anyone receiving such a letter should take advice from a Solicitor with expertise in Conveyancing in the Bath area, as if they do want to proceed it will be necessary for a formal transfer to be made so that the it is properly extinguished.

It will usually be expected for the buyer to pay the seller's Solicitor’s Conveyancing Fees as well as his own, and many people consider that it is not worth the expense to buy it out, as it is unlikely to have any significant effect on the value of the property.

Note that there is no statutory right of ‘buy-out’, and statutory provisions relating to leasehold property and rents do not generally apply.

There are a number of peculiarities when transacting property in Bath and buyers and sellers are urged to seek the advice of a Solicitor with local knowledge of Conveyancing in Bath.

For more information call Fridaysmove on 0330 660 0286 or get a Bath Conveyancing Quote.

Get a Solicitor's quote for Conveyancing in Bath.