Historic rent charges: old rights, new rules
One of the aims of The Leasehold and Freehold Reform Act 2024 (LFRA) was to remove the outdated and punitive powers available to enforce historic rent charges under section 121 of the Law of Property Act 1925. It introduced a new enforcement process to prevent a rent charge owner being able to take possession of a property, or grant a statutory rent charge lease, simply because a rent charge had remained unpaid for 40 days.
However, despite the new legislation, there remains the risk that a missing rent charge owner reappears and demands payment of any back rent that is still owed prior to the insured’s ownership, and threatens to take further action if it’s not paid. It isn’t that the issue has disappeared, it’s the procedures that historic rent charge owners are permitted to take when rent is outstanding that have changed.
New rules
A key element of the new enforcement process requires rent charge owners to give the homeowner 30 days’ notice when demanding payment of the arrears, before taking any further action. This was not required under Section 121. In situations where the wording of the rent charge in the original deed explicitly contains a right of re-entry to the property due to non-payment, the rent charge owner can still take this action, or pursue standard debt recovery through the courts, if the rent demanded remains unpaid after the 30 days’ notice period. In response to these changes, our policy wording was updated to remove reference to a rent charge owner attempting to register a statutory rent charge lease against the title to the property, and is still available to provide cover, should a rent charge owner reappear claiming back rent due.
The modern world
It’s worth noting that our modern estate rent charge policy remains unaltered. Estate rent charges, typically imposed by developers on modern developments to ensure individual property owners pay a regular contribution towards the maintenance of communal and landscaped areas, were excluded from the LFRA. This means that the statutory remedies for failure to pay still include the right for the owner of the rent charge to take possession, or to grant a lease of the property.
Premiums for our historic rent charge policy start at just £22 for a policy limit of £100,000. You can find all our Outstanding Charges policies here.