Estate rentcharges—freehold land
Estate rentcharges—freehold land

The following Property practice note provides comprehensive and up to date legal information covering:

  • Estate rentcharges—freehold land
  • Positive covenants
  • Registration at Companies House
  • Registration at HM Land Registry
  • Stamp Duty
  • Enforcement
  • Problems with estate rentcharges
  • The future of estate rentcharges

When selling a freehold property, sellers may wish to create positive covenants for future owners to perform. Problems may arise with the enforcement of positive covenants against successors. Covenants in leases bind the original tenant and their successors in title but positive covenants in freehold sales do not. An estate rentcharge may be used as one of the ways to protect and enforce covenants on freehold property. 

For other methods see Practice Note: Positive covenants—binding successors in title

Since August 1977 it is only possible to create prescribed types of rentcharges including estate rentcharges. Estate rentcharges may be used to enforce:

  1. positive covenants

  2. service charge contributions to the cost of the rentcharge owner in performing covenants for the:

    1. provision of services

    2. carrying out of maintenance or repairs

    3. effecting of insurance, or

    4. making of any payment for the benefit of the land affected by the rentcharge or for the benefit of that and other land

To create a legal rentcharge, the rentcharge must require the payment of an amount issuing out of or charged on property either in perpetuity or for a definite period. All other rentcharges (such as a rentcharge for life) will be equitable interests. This distinction is significant in relation to the methods of protection and also in relation to the remedies available for non-payment.

Positive covenants

An estate rentcharge operates to ensure positive covenants, for

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