Rentcharges are, in theory, a very useful way of securing a
positive obligation to pay against freehold land owners. They are
mainly now created to cover estate service charges to ensure
freeholders will pay common expenses incurred in looking after
communal areas of a development and to help ensure positive
covenants are enforced which is otherwise very difficult to
achieve. However, the recent case of Roberts v Lawton
suggests that rentcharges will come under greater scrutiny.
Roberts v Lawton dealt with historic rentcharges of the
type used in the late nineteenth and early twentieth century to
secure continuing payments to the original seller of freehold land
after the land was sold. The fixed sums reserved by these
rentcharges are often reduced by inflation to nominal amounts
barely worth collecting and rarely demanded and so modern property
lawyers tend not to pay much attention to them. We expect that to
We now know from Roberts v Lawton of at least one
company which owns around 15,000 historic rentcharges and is
seeking to profit from those rentcharges. It does so by using an
enforcement right designed to cover arrears and so grants and
registers rentcharge leases over the charged freehold properties
and then demands fees for the surrender of those leases. Arrears in
this case were between £6 and £15 and the sum demanded
to surrender the leases was £650 per lease.
Once a rentcharge lease is granted the current understanding of
the law is that it can only be ended by surrender
which naturally requires the parties to agree and for which a fee
can be charged.
For so long as the rentcharge lease subsists, the freehold owner
may no longer be entitled to possession and the freehold is likely
to be unmortgageable and difficult to sell. The freeholder is
therefore at significant risk of being held to ransom by the
The statutory remedies only apply if there is no contrary
intention in the document creating the rentcharge – so what
the rentcharge deed says is significant.
The good news is that all Roberts v Lawton considered
was the question of whether or not the rentcharge leases could be
registered at the Land Registry (and the outcome was they could).
There may still be a forum (should a freehold owner emerge who is
brave enough to take the issue back to court) for considering other
issues, particularly the position of the trustees taking the
rentcharge leases and potential objections to the leases, in
particular whether the rentcharge was extinguished, and other
remedies for the unfortunate freeholder.
Practical steps for owners of property affected by a historic
rentcharge include –
Read the rentcharge deed to check
what the remedies for non-payment will be.
Find out when the rentcharge was last
paid (if the rentcharge has not been paid or paid to an incorrect
party or acknowledged within the last 12 years it should be
possible to prove it has been extinguished).
If the rentcharge hasn't been
extinguished, find the rentcharge owner and pay.
Offer payment if an owner emerges.
Don't dispute small sums and if there is any doubt pay and
state you will require a refund if the amount deemed is not validly
Start negotiations to redeem the
rentcharge and use the new statutory formula for redemption. If you
can't negotiate apply to the rentcharges unit at DCLG for a
redemption certificate – guidance and forms here
Investigate whether to put title
insurance in place.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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