A rentcharge is an annual sum paid by the owner of freehold land to a person who has no other legal interest in the land. Rentcharges have been in existence since the Statute of Quia Emptores in 1290[i]. They are often known as "chief rents" in the north west of England but the term "groundrent" is used in many parts of the country to refer to either a rentcharge or a rent payable on leasehold land. This is confusing as a true groundrent is a sum payable in relation to land held under a lease. As a result, it is important to know the status of the land for which, an annual sum is paid.
Rentcharges provided a regular income for owners of land who were prepared to release land for development. Sometimes the land was released without a capital sum being paid with the rentcharge being the only payment. Once imposed, a rentcharge continues to bind all the land even when the land is later divided and sold off in plots. In such cases one householder can be made responsible for paying the whole rent. That person is then left to collect the appropriate portion from the other householders whose land is subject to the rentcharge.
The rentowner could impose upon any one of the householders whose land is subject to the rentcharge to pay the whole sum and collect from the others. This has led to many unfair situations. In some cases, the collector was unable to obtain money from the others and was left out of pocket. Sometimes, a rentowner would agree to collect the various portions separately from each rentpayer. This is known as an apportionment and can be informal or legal. Most apportionments are informal as the owner of the land who created the rentcharge is unlikely to have been a party to the apportionment. Therefore, before redemption could take place, it would be necessary to first apportion the rentcharge legally.
Groundrents
Groundrents in respect of leasehold properties can be apportioned like rentcharges, but cannot be redeemed by the payment of a lump sum. They can only be redeemed where the annual sum is £5.00 or less and the lessor makes a request that the order has effect only for the purpose of redemption - (Section 20 of the Landlord and Tenant Act 1927). Owners of these rents generally find redemption more convenient where the amounts are small and expensive to collect. However, even if redemption of a groundrent takes place, the property is still leasehold and will revert to the freehold at the end of the term of the lease (usually 999 years). Single leasehold rents cannot be redeemed, however, tenants may be able to purchase the freehold of the land under the provisions of the Leasehold Reform Act 1967 as amended.
[i] The Statute of Quia Emptores (1290) was a statute passed by Edward I of England that prevented tenants from leasing their lands to others through subinfeudation. Pre-Quia Emptores tenants were able to lease their title to land such that the land-owning lords did not have any power over the sub-tenant to collect taxes. In its place, a system of substitution was used where the tenant's full interest would be transferred to the purchaser or donee.
