Buying freehold/peppercorn rent

[bravotango]

Hi everyone

We pay £1.68 per year on our ground rent - is there some sort of scheme whereby you can buy the freehold or pay X number of years worth and it becomes freehold? Or something? We are hoping to sell soon and considering doing this but open to ideas and words of wisdom!

This sounds like a Rentcharge aka chief rent. I've been through this twice this year.

Firstly all rentcharges disappear in 2037 - the law was changed in 1977 and they were banned with a 60 year limit on existing ones. They are mostly held by shysters, who also buy up leaseholds, they won't let you pay up front because they hope you'll miss a payment and they can hit you with admin charges, or in a very worse case scenario change the debt into a leasehold. They will also happily sell you their ownership for a vastly exaggerated price. However as part of the change in the law there is a Govt scheme where they assess and decide a buy out price, which is binding on the holder.

In my case no one held the rentcharge on my house but one of these shitty companys had been sniffing around so I took out an indemnity for my buyers peace of mind. At £3 a year it would have been cheaper to give them rent to cover til 2037!

In the case of my Dad's house he'd been paying but once the holder got wind of him selling he did everything he could to force Dad to consider a buyout rather than possibly loose a sale. They also only correspond by letter, no phone calls or emails. Lots of allegations Dad had been in breach of the contract - all total BS. In the end the buyer withheld £2000 for 12 months 'just in case' a bit of a cheek but the house sold for £365K so we sucked it up. They tried it on because they planned big changes and didn't want to have to deal with the tosser.

In your case you could try the government scheme but you've got bigger problems with any potential buyer if they get panicked about a £1.68 a year bill - any solicitor worth their salt should be able to explain all this to any buyer.

Thank you so much! This is exactly what it is. Super helpful. Will probably just go for the indemnity but I'm tempted to submit the form and see just how much it would be to redeem it. Looking at my old purchase docs though I can see the previous owner said it was leasehold, but on the land registry it says freehold. Very confusing.

Check with your solicitor but I think as you are paying it an indemnity may not apply. My solicitor said I should let sleeping dogs lie with my unclaimed rentcharge and just buy a policy. And in the case of Dad's house the rentcharge holder obviously scans Rightmove constantly to see if any of his properties are up for sale and if he can claim changes breach his contract.

Incidentally generally speaking a rentcharge is based on the original building's footprint. So an extension will possibly be in breach without an agreement and a fat fee of course. The utter shyster holding Dad's rentcharge suggested changing the windows and fitting a new bathroom 'might be in breach', which was nonsense, he was just doing it to try to force us to do a quick buyout at his price. And only doing business by letter meant he could take his time over anything that didn't involve him getting money. Roll on 2037 and to an end to all this archaic rubbish.

My mother bought my parents freehold, but after she died we realised the deeds hadn't been changed, so I got it done when I had the them changed into my name after probate. I would just caution you that the Land Registry is currently taking absolutely ages to do anything that isn't a priority (i.e. not to do with a house sale) and it took over a year for this simple change to be made.

Rentcharge is different to leasehold and it appears to be quite regional. With leasehold you never own the land you lease it, only owning the building.

With rentcharge though you own the land there is an annual fee on it. Basically when the landowner sold to the builder they charged less to their land but attached a small annual rent to each property. In theory this would eventually gain them more money than an outright sale. This practice was finally stopped in 1977. Though these charges are on the deeds for a property as long as you can show changes have been recently or provide insurance it shouldn't be an issue.

I had much more fun with the LR because the bottom of my yard was on a separate deed and not in my name (or anyone elses) and who knows why.