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Be Aware of Rentcharges – Whether or Not You Receive a Bill

As homeowners we’ve all experienced it - that sinking feeling after receiving our wage only to see it eaten away with mortgage payments, energy bills and council tax.

It can be a push some months to make funds stretch but knowing what to expect can make budgeting a little easier.

And while many of us will have a little pot of money stashed away for maintenance issues – boiler problems, gutters needing to be repaired etc - demands for money that we hadn’t anticipated can really cause problems with our financing.

That’s why more attention needs to be paid to rentcharges which can come completely out of the blue.

What are rentcharges?

They’re recurring payments that are charged out of freehold properties and can be both fixed and variable.
The historic type of fixed rentcharge would usually be referred to on the register of title, which is held at the Land Registry. The reference on the register will tell you how much the rent is and details of the document that created it, but not usually who it is payable to.

Unfortunately there is no central record of rentcharges and so this information should have been provided at the time you purchased your property. Often rentcharges are not collected and so indemnity insurance is often put in place at the time of purchase to cover the homeowner.

If you are unsure, you could always ask neighbours if they are aware of when it is collected as often rentcharges also affect neighbouring properties.

What happens if you don’t pay them?

The document that created the rentcharge will specify what happens in the event of non-payment. Typically it would state that the owner of the charge is entitled to charge interest on outstanding rent and at worst, take possession of the property for non-payment, however in reality that is unlikely to happen as a court order would be required.
If you have purchased a property subject to a rentcharge and were not advised by your solicitor at the time, this would be grounds for complaint. However, to take action against them you would need to show that you have suffered loss as a result of the omission.
Unscrupulous rentcharge owners could in theory not demand rent and then charge late payment fees and solicitors costs so it is imperative that if you know a rentcharge is payable and is actively collected, you take positive steps to ensure that it is paid.

I know a rentcharge exists on my property but nobody collects it – can I just wait until I receive a letter about it?

No – don’t do that! If you are aware a rentcharge is payable, try and ascertain who it is payable to and try and ensure it is paid whether a demand is received or not. If the charge has not been paid for many years then the safest option, instead of attempting to contact the rentcharge owner, would be to take advice from your solicitor regarding putting in place indemnity insurance to cover any loss suffered by you.
Be careful to check the terms of the policy however as some policies do not cover the actual arrears, but cover the cost of any action taken by the rentcharge owner for non-payment.

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