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Column 5th February 2020

Homebuyer beware - Rentcharge could bite you in the end!

Late last year the Herald published an article about a family in Wantage unable to sell their home on one of the new developments because of an estate rentcharge that the home owner must pay towards the upkeep of the communal areas on the development.

This is sometimes called a maintenance charge or a service charge but when the term “rentcharge” is used the 1925 law of Property Act means that if the homeowner falls behind with payments, the estate manager can claim the home.

Mortgage companies don’t like this and are often unwilling to lend on properties with this term in the deeds.

Communal areas include not just parks and green spaces but also private roads and footpaths and surface drainage.

Historically, public open spaces on developments have been given to the local council together with money to pay for the maintenance for a number of years until all the homes are occupied and the council tax would be sufficient to cover the costs.

Yet all councils are cutting back on maintenance of public spaces and are increasingly unwilling to take on the communal areas on new developments either because of the cost of maintenance or the responsibilities involved, leaving the homeowners to foot the bill.

Also, when developers build new roads as part of estates, they agree with the council which roads they will build to public highway standards in order for the council to adopt them.

Adoption of a road means that Oxfordshire County Council as the highways authority is responsible for keeping these roads in a usable, safe condition and maintaining street lighting and managing foliage.

Not all roads on new developments are designed to meet highway standards and unadopted private roads and the associated street lights, street cleaning, footpaths etc. remain the responsibility of the estate. The upkeep of these and any communal areas on the estate have to be funded by homeowners.

A home owner will still pay council tax which includes payments to Oxfordshire County Council, Thames Valley Police, the Vale of White Horse District Council and the town or parish council.

This covers policing, fire and rescue, libraries, social services, maintenance of public highways and public open space, street lighting, refuse collection, maintenance of cemeteries and allotments etc.

The amount council tax can increase is restricted by the government. However, there are no legal controls over increases to maintenance charges paid to estate management companies.

Buyer beware!


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