A change of perspective
It wasn’t so long ago that rentcharges were paid little mind. After all, the amounts involved were often small and owed to rentowners that were unknown or missing. And, although rentowners could technically repossess a property to recover any arrears, this wasn’t exactly a common occurrence. So, it’s easy to understand why very few people seemed to worry about rentcharges until the ruling in Roberts v Lawton revealed a company called Morgoed Estates Ltd turned rentcharges into big problems for homeowners.
Roberts v Lawton
The arrears on Morgoed’s rentcharges were trivial, ranging from £6 to £15 per property. To recover the arrears, Morgoed unexpectedly exercised one of its statutory enforcement rights by granting 99-year leases to its directors on each property and demanded sums of up to £650 in exchange for surrendering the leases. Held to ransom for amounts far in excess of the arrears owed, the homeowners took Morgoed to court.
The case of Roberts v Lawton saw the Court call Morgoed’s behaviour both draconian and troubling. Unfortunately, it also ruled that Morgoed were within their rights to register leases against the property titles, meaning that the homeowners had no choice but to bow to Morgoed’s demands.
Fallout
In the months since Roberts v Lawton, we’ve seen companies buying up rentcharges to exploit this ruling (especially in Bristol and Manchester, for some reason). Thankfully, the Government has taken notice; in December, it revealed it would look at legislation to prevent rentowners granting leases in the same manner as Morgoed.
But such legislation is likely to take some time, and what is a buyer to do until then? If the property they want to purchase is subject to a rentcharge, do they have to abandon the transaction for fear of another Morgoed, or just cross their fingers and hope for the best?
Thankfully, there’s an alternative: our Freehold Rentcharge indemnity policy.
A low-cost solution
Our cover represents a low-cost solution to the risk that your client could unexpectedly face a badly behaved rentowner. If there has been no prior contact with the rentowner, we can protect your client, as well as their lender and lessees, from enforcement action to recover the outstanding rent, including any costs demanded by a rentowner in exchange for surrendering a lease.
We’ll also protect your clients against attempts to repossess the property, any legal costs involved in defending a claim, and any costs of repaying arrears.
We can cover your client from just £22, so why not get a quote from ICON, or speak to one of our specialists on 01603 761515 or underwriters@isisconveyancing.co.uk about our Freehold Rentcharge indemnity cover?