What is the problem with this Fixed Rentcharge?
Newhall has historically not charged this Fixed Rentcharge to residents of Newhall since the first sale of property circa 2002 to end of 2022.
As of 1st January 2023 SHW started charging the Fixed Rentcharge to all residents of Newhall - freehold and leasehold - allegedly on the basis that there had been instruction from Tees Law to Newhall Projects, Newhall Residents Association to commence charging the £1 Fixed Rentcharge “following some legal advice that the Fixed Rentcharge should be charged from 2023 onwards.”
Some more recent onward sales/purchases of property in Newhall have seen independent conveyancers push Newhall to accept payments from the very first date of property from new plot sale date to current purchase date for every year £1 Fixed Rentcharge because the way Fixed Rentcharge works is that it does not have to be legally demanded, you have to remeber that it needs to be paid and when to pay and failure to pay after 40 days of it becoming due can result in a lease with a Trustee being put over your property that is not obliged to be taken off and/or possession of your property without notice.
This is an estate Fixed Rentcharge and as such is not redeemable. These estate type Fixed Rentcharges are deemed "toxic" by a plethora of solicitor articles and Mortgage Council best practices will not allow most lenders to re-mortgage or lend to new buyers since the 2016 case of Roberts V Lawton and has resulted in residents of Newhall having to enter into costly circa £1-1.5k Deed of Variations at the cost of the property owner.
Why? Because previously to Newhall not demanding and charging this £1 Fixed Rentcharge residents could have taken out a straightforward indemnity policy where a the Fixed Rentcharge has not been charged/demanded for 10 years or more. Now because of Newhall's Tees Law recommendation “following some legal advice that the Fixed Rentcharge should be charged from 2023 onwards.” residents more and more now as more lenders adhere to the Mortgage Council best practices concerning this have no other option than to pay circa £1-1.5k in legal fees to undertake the required Deed of Variation if they wish to re-mortgage or sell their property.
What is the toxic and hidden impact on residents of Newhall?
We now have some residents whom have paid for many previous years to the start of demanding in 2023 on 1st January. Thus meaning the Fixed Rentcharge has become payable and due for the previous years by all residents of Newhall and we are unaware what is the earliest date/year sums have now been paid from by these residents making the rest of us now exposed to failure to pay Fixed Rentcharge £1 for these years
SHW are demanding this £1 Fixed Rentcharge incorrectly as part of the service charge demands and splitting into £0.25 quarterly sums. From advice and research into what this sudden surprise Fixed Rentcharge is that all developer pushed conveyancers missed/failed to bring to our attention as purchasers/make sure was paid and "everything clear" on our behalfs at completion, there is a line in our NRAL Deed of Covenant and Rentcharge that states "Fixed Rentcharge means perpetual yearly estate rent charge of £1 forever charged on and issuing out of the Premises"
Companies have been buying up Fixed Rentcharges for example in Manchester, Bristol areas to exploit the Roberts V Lawton ruling in respect to the places leases over properties with Trustees that does not have a statutory mechanism to release/surender the lease.
What are the other issues that have come to light whilst reviewing various phases TP1, lease and Deed documents?
It appears that Phase 1 properties so far reviewed have in common a style of TP1, Deed and Lease where applicable (flats) that does not contain any reference to the £1 Fixed Rentcharge payment. It appers the only legal documentation this reference to the Fixed Rentcharge exists is in the Newhall Residents Association Limited Deed of Covenant and Rentcharge. Therefore, it is recommended that we from a Phase 1 perspective we group challenge this back to Newhall and Tees Law upon what element of an actual signed contract of Phase 1 they are relying upon to demand this payment and place this high risk implication over Phase 1 properties. A template for such group action will be created and shared here for further group action by all.
First step action for Phase 1 residents -
Please check your TP1 document (it will be the document that is to transfer the property to your name and has TP1 (sometimes a TR1) in the top right hand corner of the document). For those who have requested this/provided their documents to check this is confirmed as not present in your documents.
Check whether you signed a Newhall Residents Association Limited Deed of Covenant and Rentcharge - it will say this on the front cover of the document. Many Phase 1 have only a very simple minimal Deed that was signed into and again for those already checked/provided for checking this is confirmed as not present in your documents.
For flats - check your lease documents for any reference to £1 Fixed Rentcharge
If you do not have any of these documents in your possession it is recommended that you write to your conveyancer solicitor and ask them to pull your files from electronic archive as it appears that the Fixed Rentcharge that has serious high risk implications to your property and is in a state of disparity of residents who've paid more years than otehrs who have paid only the two years demanded needs to be reviewed for why it was missed at conveyancing and not paid on behalf of yourself upon completion/informed why it would not be paid on your behalf.
For other Phases - The Edge (Linden's), Fusion and Base.
We will need to challenge why the disparity as the fundamentals of Rentcharges and the alleged fundamental principles upon which Newhall have based the development upon is equal, fair and reasonable treatment of residents across the board. Why has this high risk implication been written into our contracts? Why have all phases pushed conveyancers from developers upon us all 'missed' the Fixed Rentcharge £1 and not highlighted this and the risk, not paid on our behalf at completion and not indicated why it wouldn't be paid upon completion. It is not common practice for all developer pushed conveyancers who apparently are supposed to be in possession of every piece of information possible about Newhall to have missed this across all the phases.
There is currently a legal investigation underway in its 28 days process to start with as to why this was 'missed' by all conveyancers.
First steps action for other Phases residents -
We await the allege letter that will be coming from Newhall to state that they allege to not have an intention to to grant a lease or take possession of your property if you fail to:
pay your Fixed Rentcharge £1 in full within 40 days of it becoming due
pay your full estate Rentcharge (aka service charge) - taking away your rights to challenge reasonableness or hold back payments on the grounds of reasonable or another reasonable challenges
breach one of the covenants of the TP1 and Newhall Residents Association Limited Deed of Covenant and Rentcharge
Upon receipt of this letter from Newhall this provides strong grounds for requesting the remedies of posession and lease to be removed in the form of a Deed of Variation. Why is this important? Because a simple variation to the terms of making notice 3 months for example may be suitable at the moment for the Mortgage company and/or a buyer, however Mortgage Council lenders best practices change and buyers preferences also are to be taken into account and the subsequent mortgage lender and/or buyer may require further costly Deed of Variation change to include a further terms i.e giving them certain amount of notice too. A group template letter will be shared once the Newhall letter is posted either on the website or out to residents individually.
It also stands at the moment that there are multiple variations of different forms of Deed of Variations terms being entered into across Newhall and it comes back to the Rentcharges and the alleged fundamental principles upon which Newhall have based the development upon is equal, fair and reasonable treatment of residents across the board.
Action for ALL PHASES residents to do in the meantime to protect and cover themselves as minimum:
Pay your £2 via BACS (faster payment services) and put in your reference FXD + [your property reference]. Why? Because at the moment SHW are deducting your £1 incorrectly from the Service Charge balance. This £1 charge is nothing to do with service charge. If you do not stipualte what a payment is exactly for then it is fair game and if you need to rely on this for any reason you need to be able to demonstrate that you made the specific payment to avoid action being taken.
Send in the template letter titled 14 Days Notice - Everything Clear Confirmation Required for Fixed Rent Charge of £1 The link to which can be found in the description of the WhatsApp group description.
Followed by sending in the 14 Days Notice - Deed of Variation immediate actions required for immediate remediation The link to which can be found in the description of the WhatsApp group description.