At Morgoed Estates, we’re here to help you navigate the sometimes tricky legalities surrounding ground rent and rent charges. We’ve compiled some of the most common questions we’ve received from customers, but don’t hesitate to get in touch if you need further advice.
In England and Wales land can only be owned in two ways: freehold and leasehold. These are known as estates in land.
Freehold tenure means that you own the land absolutely without time limit subject to any encumbrances (e.g. a rentcharge or mortgage) that may affect the land. Commonhold is a type of freehold tenure.
Leasehold tenure means that you have the right to occupy land for a set period of time known as the term usually paying a rent for the duration of the term. This rent could be any amount from a peppercorn (effectively nothing) upwards. The term, the amount of ground rent and any other rights or obligations will all be set out in your lease. At the end of the term the lease ends and the right to occupy the land reverts to the freeholder or another leaseholder with a longer term than yours.
With the exception of a very small number of flats, you will find that most flats are leasehold. This is to ensure that covenants can be enforced properly between flat owners after the original owners have sold their flats. In this situation leaseholder A cannot stop anti-social behaviour by leaseholder B, but can ask the freeholder to do so and vice-versa.
It is true that most houses in the UK are now owned on a freehold basis but this was not always so. Leasehold houses were once prevalent in all parts of the UK, but over time they have become concentrated in certain traditional areas. In Lancashire, for example many large estates gave their land away in return for a ground rent payment. It was also common for leasehold houses to be sold cheaper than on a freehold basis.
A rentcharge is, as the name suggests, a form of charge on land (usually freehold). It is quite similar to a mortgage but creates a rent instead of the payment of interest. Rentcharges are usually created by a conveyance.
A rentcharge should be recorded on your Land Registry title in section C - The Charges Register. On buying a house, your solicitor should advise you if there is a rentcharge affecting the property.
You will find a comprehensive guide to redeeming your rentcharge on the We Sell pages.
The law governing the enfranchisement of houses is currently to be found in the Leasehold Reform Act 1967 which gives lessees the right to purchase their freehold reversion after two years of ownership on payment of compensation and costs. If we have offered you the chance to acquire the freehold to your house, it will be on terms that should represent better value than the statutory method and we do not require any prior period of ownership.
You cannot purchase the freehold to a flat individually but you can extend the lease. Lease extensions are governed by the Leasehold Reform, Housing and Urban Development Act 1993. The valuation mechanism is considerably more complex than that for houses. If you wish to obtain a quote to extend your lease please contact us.
You will find a comprehensive guide to buying your freehold on the We Sell pages.
The most likely answer is that we do not own the freehold to your property or we are waiting for our registration at the Land Registry to be completed. In some cases we merely own a head-leasehold interest. This means we own a lease slightly longer than your lease and the freehold is owned by a third party. This gives us a right to collect a ground rent. We not do habitually offer head-leasehold interests for sale until we can include the freehold.
Conveyancers acting for the purchaser of a leasehold property will normally wish to see that the ground rent is paid up to date. This has a twofold purpose. First, if the rent is up to date, the purchaser will no be exposed to any financial liability or risk of forfeiture. Secondly, a written receipt or statement supplied by a landlord acts a de-facto waiver of any breach of covenant by the lessee. Because of this and the high volume of requests received, we do make a nominal charge for providing written receipts.
LPE1 refers to the Law Society Leasehold Property Enquries Form 1. This is a comprehensive 10 page questionnaire that sellers' solicitors may ask a landlord or managing agent to complete. For more complex buildings, the responses may include attachments such as insurance or service charge information running to hundreds of pages. The intention is to give the purchaser all the information they need to make an informed decision on purchasing the property. Our current fees for providing LPE1 packs can be found in the Solicitor's Guide section.
Some more modern leases, particularly leases of flats, may specify that a deed of covenant or is obtained before the flat is sold. This is a document signed by the seller, the buyer and the landlord. It absolves the outgoing lessee of liabilities under the lease and confirms that the buyer will take those liabilities on. an be found in the Solicitor's Guide section.
A licence to assign is similar to a deed of covenant but includes an approval of the transaction by the landlord. In many cases the sale will not be able to be registered at the Land Registry without this approval. It is usual that a landlord will not be able to withhold approval without good reason. an be found in the Solicitor's Guide section.
If you live in a block of flats, it is possible that a management company is responsible for looking after the day to day management of the block. If the management company is a tenant owned management company, you will need to ensure that any share owned by the previous flat owner is transferred to you.
A notice of assignment is a formal written notice given buy the solicitor for the buyer to the landlord on the purchase of a leasehold property. This is receipted and returned by the landlord to acknowledge the interest of the buyer and/or their mortgagee. Our current fees can be found in the Solicitor's Guide section.
If you have received a letter from us, this is because we own and interest in your property that entitles us to collect a rent. Ground rent demands are in a statutory approved form which includes a summary of your rights and obligations. Rentcharge demands do not need to be in any particular form but we tend to follow a similar format to avoid confusion.
There could be a number of reasons. If we have just acquired the ground rent or rentcharge on your property, it may not have been collected for some years. Sometimes a ground rent may affect more than one property and informal ground rent collection traditions have meant that one person in a street is left to pay the ground rent for their neighbours. We endeavour to cancel these wherever possible so each person affected pays an equal amount. In both cases, the first time we write to you will include an introductory letter. Finally, you may not have supplied us or our predecessors your correct address for correspondence.
Card payments can be made through the Make a Payment button or by telephone (£50.00 minimum payment applies). Cheques or postal orders should be made payable to Morgoed Estates Limited and sent to the address on the Contact Us page.
Your statutory rights and obligations will be set out on your ground rent demand. If your ground rent is left unpaid, we will usually issue a reminder letter and a small fee will be added to your account. This may also happen if you have not kept us up to date with your address for correspondence and we have incurred Land Registry costs. Ultimately, if the amount owing is either in excess of £350.00 or a smaller amount outstanding for more than three years, we do have the right to issue possession proceedings. The overwhelming majority of cases are settled prior to proceedings but you should be aware this process can result in your becoming liable for significant costs either with us or with your mortgage company if they feel it necessary to pay on your behalf. If you are struggling to pay arrears, please do contact us as soon as possible.
If your rentcharge is left unpaid for six months to a year, we will usually issue a reminder letter and a small fee will be added to your account. This may also happen if you have not kept us up to date with your address for correspondence. Many rentcharge reserve a right to bring possession proceedings as with ground rents. Many rentcharges also contain a power to issue a lease under section 121(4) of the Law or Property Act 1925. Both possession proceedings and leases are last resorts.
Yes. By law we are supposed to send ground rent demands to the last known address that you inform us of in writing. If mail is returned to us, we will first readdress it to the property and then investigate the title to the property at the Land Registry. This may result in a fee being added to your account. It is highly advisable to make sure that the Land Registry has your correct address for correspondence. This particularly important for non-resident buy to let landlords. Please see the Land Registry pages on the .Gov website.
A service charge is a payment for some form of communal service most commonly in a block of flats but they are found in developments of houses as well. In small developments, this may just be a small payment to cover the costs of buildings insurance. In larger blocks a service charge may pay for the costs of structural maintenance, professional managing agent's fees and sinking funds for replacing capital items. With the exception of very small blocks which do not operate formal maintenance funds, all developments owned by us are managed by professional managing agents who are obliged to keep service charge funds in ring-fenced accounts.
First of all please bring your concerns to the managing agent for your development. If you still have a concern, please then contact us and we will investigate. If your concerns remain outstanding after that point, you will find a summary of your rights and obligations included with each service charge invoice. You can also find further advice from LEASE (the Leasehold Advisory Service).
It is important to note that service charges are a necessary part of living in a development with communal amenities. Without funds, the fabric of the building and day to day services will begin to suffer. The law around service charges is complex and we would refer you to LEASE for further information.
Most leases or rentcharge conveyances will contain covenants. These are contractual provisions that place obligations on a leaseholder or rentcharge payer. They may also place obligations on the land owner. Your solicitor should explain these to you carefully when you buy a property.
The answer depends on the terms of the lease/rentcharge conveyance. Most house leases will allow internal works to be carried out without landlord approval. Changing the external appearance of a property will normally require consent and if it is not obtained, the subject is likely to be raised when your house is next sold. Consent is easy to obtain. Please contact us for details.
The vast majority of flat leases will require landlord's consent to any building works. This is to ensure that the structure of the building is preserved for the benefit of all lessees. If you are considering carrying out any building works on your flat, please contact us at an early stage before you incur any costs planning your project.
Restricting the type of pets a lessee can own is a provision commonly found in flat leases. Where there is a management company or managing agent in place at a block, our policy is to defer to their expertise, so please contact them. In other blocks, we are neutral on the subject of pets. However, please be aware that if we are receipt of complaints from other lessees that pets are causing a nuisance or are being kept in unsuitable premises, we may be obliged to take action.
In the first instance, please contact the managing agent for the development if there is one. If they are unable to assist and you have not been able to obtain any help from the local authority or police, please contact us. Most cases are resolved by letter. Please note that not all leases allow us to take action. We must also note that in complex cases, leases generally include the right for the landlord to ask the complaining leaseholder to cover the landlord's costs.