- February 2, 2015
- Posted by: Josiah Hincks Solicitors
- Category: Property Law Updates
A householder ended up in a nightmarish cycle of litigation and under threat of losing his home after falling behind on the ‘trivial’ ground rent – just £2.75 a year – he was obliged to pay under the terms of a dusty Edwardian document.
When the man bought his modest home for £59,000 he knew that it was subject to a ‘rentcharge’ enshrined in a 1903 indenture. Rentcharges, which are of ancient origin, were for centuries a popular means of enabling people to purchase property for reduced capital sums in return for annual ground rent payments.
In this case, the rentcharge obliged the man to pay £2.75 a year up until 2037. He duly paid those sums until the benefit of the indenture was transferred to a company which specialised in buying up rentcharges in bulk in the hope of commercial gain. He bitterly fell out with the company and built up arrears totalling £13.75.
The company’s reaction was to threaten possession proceedings. It then exercised its power under the Law of Property Act 1925 to grant two of its directors a long lease over the man’s home. When it sought to register that lease, the matter was referred to the First-tier Tribunal (FTT).
The FTT noted that there was no doubt that the rentcharge existed; that it had been validly assigned to the company and that the man had fallen into arrears. However, in blocking the lease’s registration, the FTT noted that he was entitled to redeem his obligations under the indenture by virtue of the Rentcharges Act 1977.
The company was not entitled to recover the costs of creating the lease and was due only ‘very modest’ sums to cover the arrears and to redeem the rentcharge. The man was awarded his legal costs, which were likely to greatly reduce, or even extinguish, the sums which he owed to the company.