Service charge on old freehold property

[raybarrow]

Hi Folks,

Decided to take the inherited house of the market for the time being, very low offer. The process of putting it on the market seems to have thrown up the spectre of a Service Charge. The house is a terraced house on a street in Manchester. Must be 1930s or there abouts. No 'common' areas to be maintained. Doesn't appear to being charged or paid anywhere.
Where do start looking to confirm this - deeds? Can we 'buy it out' if it exists. Are we talking solicitors getting involved? As we continuing to be 'money grabbing landlords' - anything but, it might be a good time to deal with this potential Service Charge for when we decide conditions are more favourable to sell the house. Who knows when that might be.

Any advice welcome,
Ray.

[raybarrow]

Hi Folks,
Looks like my brother had this info on his old computer when it collapsed and died. He was unable to recover the info. I thought asking him about the backups might not go down well!
Ray.

[Mike4]

I dunno about acquiring the info from external sources but I had similar once, on a 1900 Reading terrace. It was actually called a "rent charge" and was about £1.70 a year. Hardly worth the effort of collecting it, but collect it they did! I eventually bought them out with a lump sum payment of about £30, iirc.

With your house yes it us something that will need to be addressed, but if no-one is collecting the sum it is hard to know what to do with it. You may find your solicitor can flog you an insurance policy that insures you against any future emergence of a landlord entitled to collect the unpaid arrears, and similarly the buyer of your house might be able to get a policy against future collections.

Just an idea to ask your sol about....

[mc2fool]

Not clear what service charge there'd be for a freehold property. Service charges are normally specified in the lease for leasehold properties but you may find something related in the title register and/or deeds. Start here: https://www.gov.uk/get-information-about-property-and-land

OTOH just leave it to the solicitors to find out about. I take it you haven't yet engaged any for the sale, but you will eventually.....

[scrumpyjack]

You could ask a neighbour if they know anything about it. Adjacent terraced houses may well have the same 'service' charge from the same entity.

[pochisoldi]

For what it's worth, the purchasers of my parents house jn Stockport got twitchy about some 15+ years unpaid rent charge. We had no idea who owned the charge and no evidence of payment other than a receipt from years bsck from an estate agent who had gone out of business ages before. I can't remember the amount but it was no more than £5 per annum.

"Our" solicitors didn't have a clue until I suggested "The limitation period is no more than 12 years, so that's no more than £60. - we'll reduce the price by that amount, otherwise the purchasers can buy themselves an indemnity policy".
The other side took the £60...

I hate the lack of common sense sometimes demonstrated to me by conveyancers on sides of a transaction...

[Clitheroekid]

An old terraced house in Manchester will NOT be subject to a service charge - and that's guaranteed!

As Mike4 has said, it's almost certainly a rentcharge. These are essentially the same as ground rent, but they are charged on freehold property rather than leasehold property.

They are archaic, but many houses of this type have them. It's often the case that the amounts are so small that the rentcharge owner has long since giving up collecting them.

If you know who the fortunate owner is you can apply to have the rentcharge formally `redeemed'. This means you pay the owner a small sum and you are issued with a redemption certificate, showing that the rentcharge is no longer due - https://www.gov.uk/guidance/rentcharges

Alternatively, if you're not in any hurry you could wait until July 2037 when all such rentcharges will be abolished

[raybarrow]

Hi Folks,
It probably is Ground Rent and noone seems to chasing for it. Brother can do a bit of gentle digging. The insurance policy against a claim is an interesting suggestion.

Alternatively, if you're not in any hurry you could wait until July 2037 when all such rentcharges will be abolished

I'll be 88 by then so it could be something to live for.
My Dad used to say he invested in Tessas/Peps to give him a reason to stay alive for the next five/seven years. He lived to a ripe old age. It's a northern thing!

Ray.

[pochisoldi]

Hi Folks,
It probably is Ground Rent and noone seems to chasing for it. Brother can do a bit of gentle digging. The insurance policy against a claim is an interesting suggestion.

Alternatively, if you're not in any hurry you could wait until July 2037 when all such rentcharges will be abolished

I'll be 88 by then so it could be something to live for.
My Dad used to say he invested in Tessas/Peps to give him a reason to stay alive for the next five/seven years. He lived to a ripe old age. It's a northern thing!

Ray.

The "knock off £60 or buy your own cover" tactic was to persuade the purchaser to get on with the transaction (we needed the sale to go through ASAP and £60 was a small price to pay).

Buying an insurance policy would be pointless as it would cost more than any possible liability (if the charge owner could be bothered in the first place given that the charge is flat - will never increase over time).

[Mike4]

Given my own rentcharge must have been set when the place was first built (or so I imagine), the sum of £1.50 or £1 10/- back in the year 1900 must have been a fair old sum.

But looking at the BoE site maybe not so much. According to their calculator, £1.50 back in the year 1900 would have been worth £140.44 in todays money. Frankly I'm really surprised it wasn't loads more than that!

https://www.bankofengland.co.uk/monetar ... calculator

[gryffron]

Given my own rentcharge must have been set when the place was first built (or so I imagine), the sum of £1.50 or £1 10/- back in the year 1900 must have been a fair old sum.
But looking at the BoE site maybe not so much. According to their calculator, £1.50 back in the year 1900 would have been worth £140.44 in todays money. Frankly I'm really surprised it wasn't loads more than that!
https://www.bankofengland.co.uk/monetar ... calculator

But average wage was only £42pa, compared to £38k in 2022. So it was 13 days wages back then (*), only 1.5 now. A fine example of how inflation is not a good indicator of real living standards.

Gryff

(*) Probably quite a lot more. As I doubt working class Manchester residents were paid anywhere close to the National average wage, then or now.