Buying a freehold property then finding its subject to a rent charge covenant!!!

[Dave909]

We have spent the last couple of months going through the buying process of a property as a first time buyer on what was advertised as a freehold property. Only reaching the final part of the process just prior to completion the sellers side have now, and just now disclosed further details that whilst the property does appear to be freehold that it is also subject to an annual "rent charge" and conditions. At no point prior to being provided with this information and documentation did I or our solicitors (to the best of my knowledge) know anything about this so called charge and it has me as much highly "annoyed" as much as confused over this "rent charge" on what is supposed to be a freehold property leaving me feel cheated in a way. More so in that some of the detail on this so called charge suggests that in theory failure to comply with such conditions on this rent charge covenant to the letter could leave the rent charge leaseholder with the right to reposes the freehold property!.

Further more, I think its slightly confused our conveyancing solicitors too. As whilst some of the paperwork confirms the property as freehold, other paperwork titled "Insurance approval - Commonhold & Leasehold reform act 2002 suggests the property as leasehold, and makes reference to title deeds & lease for insurance approval. Stating further down "as you are buying a leasehold property" which references the right to use the buyers own insurance option than the leaseholders preferred insurers under the act etc. Well you can see how I'm confused, as different letters suggesting different things. I do have a several pages of legal documents that in legal jargon details both the freehold & rent charge yet I'm struggling to get my head round it.

But it does seem to affect 8 properties on that side of the street and does confirm the first recorded freehold tenure sale of the property back in 1972. I don't think it directly states what the charge is even for, but think it could be to do with the alleyway access that goes allong the rear of the properties, but assume this was\is owned or mentained by the council (therefore covered by local council tax) seeing as council gates either end of the alleyway. So can anyone offer and advice as I'm totally unsure on if this is a very bad thing and if not, could it affect the property value either now or in the future?.

[lgfa92]

We have spent the last couple of months going through the buying process of a property as a first time buyer on what was advertised as a freehold property. Only reaching the final part of the process just prior to completion the sellers side have now, and just now disclosed further details that whilst the property does appear to be freehold that it is also subject to an annual "rent charge" and conditions. At no point prior to being provided with this information and documentation did I or our solicitors (to the best of my knowledge) know anything about this so called charge and it has me as much highly "annoyed" as much as confused over this "rent charge" on what is supposed to be a freehold property leaving me feel cheated in a way. More so in that some of the detail on this so called charge suggests that in theory failure to comply with such conditions on this rent charge covenant to the letter could leave the rent charge leaseholder with the right to reposes the freehold property!.

Further more, I think its slightly confused our conveyancing solicitors too. As whilst some of the paperwork confirms the property as freehold, other paperwork titled "Insurance approval - Commonhold & Leasehold reform act 2002 suggests the property as leasehold, and makes reference to title deeds & lease for insurance approval. Stating further down "as you are buying a leasehold property" which references the right to use the buyers own insurance option than the leaseholders preferred insurers under the act etc. Well you can see how I'm confused, as different letters suggesting different things. I do have a several pages of legal documents that in legal jargon details both the freehold & rent charge yet I'm struggling to get my head round it.

But it does seem to affect 8 properties on that side of the street and does confirm the first recorded freehold tenure sale of the property back in 1972. I don't think it directly states what the charge is even for, but think it could be to do with the alleyway access that goes allong the rear of the properties, but assume this was\is owned or mentained by the council (therefore covered by local council tax) seeing as council gates either end of the alleyway. So can anyone offer and advice as I'm totally unsure on if this is a very bad thing and if not, could it affect the property value either now or in the future?.

What does the title deed say for the property you are purchasing - rent charges are paid only on freeholds.

Your solicitors should have picked up on the rentcharge - you need to ask them why they didn't.

Rentcharges can often be paid off with a lumpsum - https://www.gov.uk/guidance/rentchar...y-is-leasehold

[Dave909]

The title deed indicates it as freehold, I have both the property report and a previous conveyance from 1972 and a copy the register title also states freehold. Just annoyed how on so far into the buying process this has only now come to light, more so in that it's hardly an insignificant development seeing as in an extreme case the rent charge owner could purposely allow us to default (in the absence of payment details provided) allowing them the right to both place a lease on the property and repossess the property unless there "costs" are not met. Our solicitors are suggesting there is no real requirement for this information to be made available until this sharing of information \ enquiry stage and so they (the current owners) have done nothing wrong and suggest it hardly ever affects the properties value at all anyway. But certainly the risks are there all the same despite that I'm told many of these are dormant rent charge covenants. Just highly annoyed that this was not disclosed at a much earlier stage before we have got this far into the process and already secured the mortgage against the named property (well its named on all the mortgage paperwork and solicitors letters)

Of cause, I'm told I could always take out indemnity insurance if the rent charge is dormant and or the current owners and contact details can't be obtained. This also looks to be an estate rent charge (as 8 properties apparently affected) so won't expire in 2038 either like the others do!. There is nothing in the documents that looks to identify the current rent charge owner either that I can see. Though the 1972 conveyance clearly uses legal terminology wording of the day that makes for highly difficult understanding.

But the sellers solicitors has been asked if the owners are aware of any defaults on the covenant, which if they have not paid since they owned the property I guess they must have defaulted themselves. Otherwise if they have been paying the charge then they must have owner details.

[Dave909]

As extra info trying to read through (well more understand) the paperwork, this rent charge as said affects 8 properties, yet that section of land has 15 properties on that side of the street. Also the conveyance of 1972 looks to contain (as part of the transaction?) an apportionment of the total rent charge by mutual consent. Though nothing that bridges the gap between 1972 & now in this respect. This charge may even have been bought out (redeemed) since 1972 for all I know. And there is nothing to state or clarity (that I can directly see) what type of rent charge it is anyway. As in could it be an estate charge which has no expiry or could it be otherwise and expire in 2037.