With many years experience of Conveyancing in Bristol, our Property Lawyers have come across several clients who are puzzled why they are being asked to pay a small annual rent on older freehold houses.
Why do the owners of some freehold houses in the Bristol and the Avon area discover they are receiving demands for what looks like a yearly rent?
The reason is usually that these are old charges imposed when houses were first built in the nineteenth and early twentieth centuries. (This article generally refers to old rentcharges; they are sometimes also found on recently built properties, in conjunction with provisions for service charges for the maintenance of common estate areas. There is a separate article on these. )
A rentcharge is small annual payment which is 'charged' on a freehold property - it is stated to be charged because it is payable out of the property. 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 it or not.
The reason that these were imposed is that they provide a legal mechanism which enabled the original seller (and his successors) 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 subsequent owners, and then usually only by someone who owns land which can benefit from the covenant, whereas positive covenants can only be enforced against the original buyer. However where this is imposed on the first purchaser, the imposition enables its owner to enforce positive covenants against any successive owners, and without having to own any adjacent land.
The charge is not properly speaking a rent and although it has some characteristics of a ground rent as would be payable on a leasehold house, 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.
Covenants often 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. It has to be said that it is uncommon for rentcharge owners to take action to enforce these covenants, but some are known to be quite active in demanding payment, and may be prepared to take legal recovery action if not paid, so they have a nuisance effect.
Conveyancing Solicitors in Bristol will be able to check whether there is such a rentcharge on a property, and to advise more fully on its effect. They are rarely encountered in other parts of the country, so Solicitors who do not practice in the Bristol area may be unfamiliar with them.
Acting for a buyer, the Bristol Conveyancer will check if 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 Bristol Conveyancing Solicitors 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.
Homeowners affected by these charges sometimes receive letters offering them the opportunity to buy out the rentcharge. If you receive such a letter and are thinking of proceeding, you should take advice from a Solicitor with expertise in Conveyancing in the Bristol area, as it will be necessary for a formal transfer to be made so that the it is properly extinguished. This is especially important if the charge is itself registered at the Land Registry.
The buyer will usually be expected for to pay the seller's Solicitor’s Conveyancing Fees as well as his own, and many people consider that the expense of buying out is not worthwhile as it would only save the payment of a pound or two each year, and is unlikely to have any significant effect on the value of the house.
The statutory right of buy out does not apply, and statutory provisions relating to leasehold property and rents do not generally apply.
When transacting property in and about Bristol there are a number of other legal points where the knowledge of a local Conveyancing Solicitor is invaluable, and buyers and sellers are urged to seek the advice of a Solicitor with expertise of Conveyancing in Bristol.
For more information call Fridaysmove on 0330 660 0286 or get a Bristol Conveyancing Quote.
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