Freehold Rentcharge

If you own the Freehold of your property but still find yourself paying a service charge you may have several questions such as, why? What for? Can I get out of it? What are my rights? In several cases I have come across property owners that did not even realize they were liable for such a charge. Therefore I have put together a short article for the benefit of freeholders.

Leaseholders have a huge amount of rights when it comes to their service charge. To name a few, it is the law that monies are held in trust, they have the right to see a summary of costs, the charges by law have to be reasonable and they must be consulted on qualifying major works and long term agreements. Freeholders who pay into a service charge do not have these same rights even though in many cases they may be paying into the same estate fund as leaseholders!

It is perfectly normal for freehold properties to have to contribute into a service charge fund which for  freeholders is usually defined as a “rent charge”. This will normally be where areas of a development are private and are therefore subject to a management company or landlord maintaining certain areas or equipment. You may find yourself paying towards the upkeep of roads, courtyards, play areas, gates, pumps etc. It is really important to understand exactly what you are liable to pay for. Read through your transfer document, this will outline exactly what you can be charged. If you are being charged for something that is not covered in this document then challenge it, legally you are only liable for what you agreed to pay for in the transfer.



You will most likely find that agents today do offer the same rights to owners of freehold properties that they do to leaseholders. They will send service charge accounts, they will hold funds in trust etc. however there is one huge problem that freeholders do face. What do you do if you believe the rent charge is not reasonable?

In this case a leaseholder would apply to the LVT; however this tribunal is exclusively for leaseholders, so where can freeholders go? Unfortunately there is no such tribunal set up for freeholders. However there are certain ways that you can go about ensuring that you are paying a fair and reasonable rent charge.

If you use a managing agent ensure that they are a member of ARMA. This will ensure that the agent follows guidelines to prepare a reasonable budget for you. It also ensures that as part of the agent’s complaints process an independent ombudsman will be used. Although the ombudsman cannot comment on reasonableness, they can make a ruling on the way in which the agent has performed.

If you are part of a management company then look to become a director. This will give you the chance to be involved in the preparation of the rent charge. Therefore giving you the necessary information and power to ensure a reasonable rent charge is set (see my article on preparing a budget).

I have been asked the question about dissolving estate management companies so that freeholders don’t have to pay the charge. My advice would be not to do this, without a vehicle in place to maintain these areas, even if another agreement is made, it may become problematic to sell your property. If you are unhappy with paying agent’s fees then take some advice on self-managing the development. This will however take a significant amount of time and dedication.

I hope you found this article informative, remember to read your transfer thoroughly and I would recommend using an agent registered with ARMA for the best results. If you would like further advice or have any specific questions then please get in touch.