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Housing

Rentcharges

Background

A rentcharge is an annual sum paid by the owner of freehold land to a person who has no other legal interest in the land. Rentcharges have been in existence since the Statute of Quia Emptores in 1290[i]. They are often known as "chief rents" in the north west of England but the term "groundrent" is used in many parts of the country to refer to either a rentcharge or a rent payable on leasehold land. This is confusing as a true groundrent is a sum payable in relation to land held under a lease. As a result, it is important to know the status of the land for which, an annual sum is paid.
 
Rentcharges provided a regular income for owners of land who were prepared to release land for development. Sometimes the land was released without a capital sum being paid with the rentcharge being the only payment. Once imposed, a rentcharge continues to bind all the land even when the land is later divided and sold off in plots. In such cases one householder can be made responsible for paying the whole rent. That person is then left to collect the appropriate portion from the other householders whose land is subject to the rentcharge.
 
The rentowner could impose upon any one of the householders whose land is subject to the rentcharge to pay the whole sum and collect from the others. This has led to many unfair situations. In some cases, the collector was unable to obtain money from the others and was left out of pocket. Sometimes, a rentowner would agree to collect the various portions separately from each rent payer. This is known as an apportionment and can be informal or legal. Most apportionments are informal as the owner of the land who created the rentcharge is unlikely to have been a party to the apportionment. Therefore, before redemption could take place, it would be necessary to first apportion the rentcharge legally.

Ground rents on leasehold houses

Ground rents in respect of leasehold houses can be apportioned like rentcharges where one leaseholder is responsible for paying the ground rent for a number of properties, but cannot be redeemed by the payment of a lump sum in the same way a rentcharge can. They can only be redeemed where the annual sum is £5.00 or less and the lessor makes a request that the order has effect only for the purpose of redemption - (Section 20 of the Landlord and Tenant Act 1927). Owners of these rents generally find redemption more convenient where the amounts are small and expensive to collect.

Individual ground rents on leasehold houses cannot be redeemed in the same way as a rentcharge.

Where redemption of a ground rent on a leasehold house does takes place, the property is still leasehold and will normally revert to the freeholder at the end of the term of the lease. However, leaseholders of houses may be able to exercise the statutory right to buy the freehold of the house (enfranchise) or extend the lease under the Leasehold Reform Act 1967 (as amended). They may also have security of tenure where neither of these options are possible.

[i] The Statute of Quia Emptores (1290) was a statute passed by Edward I of England that prevented tenants from leasing their lands to others through subinfeudation. Pre-Quia Emptores tenants were able to lease their title to land such that the land-owning lords did not have any power over the sub-tenant to collect taxes. In its place, a system of substitution was used where the tenant's full interest would be transferred to the purchaser or done.

Contact details

Rentcharges Team
Department for Communities and Local Government
4th Floor
One Piccadilly Gardens
Manchester M1 1RG
Telephone: 0303 44 44558
email: rentcharges@communities.gsi.gov.uk

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