Rentcharge

[steveburns]

Hi everyone

I bought a freehold buy to let property at an auction. It is an old terraced house in an area where prices are rising due to nearby developments. My solicitor found out it has a rentcharge attached to it (a very old occurrence that is very confusing). Basically there is a annual charge of around £30 dating back to the late 1800's but the owners of the rentcharge could not be found and the amount owed is also unknown. The previous owner never paid it or were contacted by the owner of the rentcharge but they only had the property for a short time. The solicitor advised me to get defective title and rent charge insurance which I have done. However I am still a bit concerned having researched the topic, as you can't always rely on the insurance to actually pay out and the consequences of the owner of the rentcharge taking your property due to missed payments. Has anyone else been in this situation and what have they done? If I try and contact the owner of the rentcharge to organise the payments or pay the ownership my insurance will be void. Additionally the charges date back to so long ago and if they have been unpaid I may owe a huge amount of money. It is a shame as the house is otherwise a nice investment.

 

[lookinginvest]

Could you not arrange some kind of indemnity with the seller and force them to take out an insurance?

 

[totallyproperty]

Hi everyone

I bought a freehold buy to let property at an auction. It is an old terraced house in an area where prices are rising due to nearby developments. My solicitor found out it has a rentcharge attached to it (a very old occurrence that is very confusing). Basically there is a annual charge of around £30 dating back to the late 1800's but the owners of the rentcharge could not be found and the amount owed is also unknown. The previous owner never paid it or were contacted by the owner of the rentcharge but they only had the property for a short time. The solicitor advised me to get defective title and rent charge insurance which I have done. However I am still a bit concerned having researched the topic, as you can't always rely on the insurance to actually pay out and the consequences of the owner of the rentcharge taking your property due to missed payments. Has anyone else been in this situation and what have they done? If I try and contact the owner of the rentcharge to organise the payments or pay the ownership my insurance will be void. Additionally the charges date back to so long ago and if they have been unpaid I may owe a huge amount of money. It is a shame as the house is otherwise a nice investment.

Hi Steve,

welcome to the forum. If you know the charge is only £30/year it doesn't sound like a huge risk? I mean, even if the owner of the rentcharge surfaced, and it hadn't been paid for 100 years previously... firstly, it should be easy to prove you have only purchased the property recently, but even if that didn't stand (for any reason) you would only owe around £3k? I say 'only' but in the grand scheme of how unlikely it is that all those things will happen... 1) This person surfaces, 2) your insurance won't cover it, 3) You have to pay for previous owed rent... So if it stacks up as a great investment i would personally not be put off by that.

Let us know how you get on!

Kelly

 

[lookinginvest]

I suppose, if the total liability at the moment if £3k maybe you could ask for a discount on the price? After all it doesnt look as though they are fighting buyers off?

 

[totallyproperty]

I suppose, if the total liability at the moment if £3k maybe you could ask for a discount on the price? After all it doesnt look as though they are fighting buyers off?

Sounds like a good idea!

 

[Nicholas Wallwork]

I suppose, if the total liability at the moment if £3k maybe you could ask for a discount on the price? After all it doesnt look as though they are fighting buyers off?

He said he'd already bought it so negotiating with the vendor is out of the question I think... especially as it was a auction sale.

Property investing is all about opportunities and "seeing the opportunities" that others don't. Kelly sums it up perfectly I think... the most important thing to do is take out good indemnity insurance through your solicitor (which you've done). I wouldn't worry it about it now as that's basically all you can do that I can think of.

You've got a good deal as others might have been put off. This in my opinion is very low risk and shouldn't take away from the great investment that you belive it to be.