Conveyancing in Bristol: How to Redeem a Rentcharge
- AuthorPaul Hajek
Update: this blog has now been updated, and you can view it here.
The Communities and Local Government Department recently published new guidance on how to pay off (or redeem in legal parlance) a Rentcharge on a freehold property.
When you are buying a property in Bristol, you may well come across a Rentcharge
Rentscharge (yes that is the correct plural even though the Government prefers Rentcharges) was a payment payable annually to a third party, sometimes but not always the original builder.
Rentscharge caught on in the late nineteenth and early twentieth centuries as a convenient way for builders to continue to receive an income from property after it had been sold. Although sometimes land would be released without a capital sum being paid with the rentcharge being the only payment.
The phrase you will hear when Conveyancing in Bristol is “freehold and free”. This will differentiate a property which is not subject to a Rentcharge. People often confuse the term Ground Rent with Rentcharge. Ground Rent is only applicable to Leasehold Land.
Since 1977 a law has allowed most existing freehold owners to buy out these rents and barred the creation of new Rentscharge subject to very few exceptions.
How to Redeem a Rentcharge:
You can always agree a price with the Rentcharge owner directly.
Otherwise, you can obtain an application for a Redemption Certificate from the Rentcharges Unit, Department for Communities & Local Government, 3rd Floor, 12 Princes Parade, Princes Dock, Liverpool L3 1DE. ( Tel: 0303 4444558)
There is something akin to a Rentcharge in Manchester known as a Chief Rent.
Exceptions to Redeem a Rentcharge
Although the Rentcharge owner cannot prevent redemption of a Rentcharge (unless one of the exceptions) unfortunately, unless the identity and address of the Rentcharge owner is known you will be unable to redeem the Rentcharge.
When this happens during the Conveyancing process i.e. you cannot show proof of payment of the Rentcharge, it is normal for a 6 year allowance to be made in favour of the Buyer. You would not be able to sue for a debt over this period as a claim would be statute barred.
How Much Will It Take To Redeem a Rentcharge
As a rule of thumb, the going rate is about 16 times the annual amount of the Rentcharge.
This will be paid directly to the Rentcharge owner. There are no administration charges.
In any event, as the sums know involved with Rentscharge are so small, there should be no affect on the marketability of your property.
If you need any further information please contact your Conveyancing Solicitor.
The good news for sellers and buyers alike, is that such restrictions are unlikely to affect the value of the property being sold or purchased