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Why a Rent Charge?

Detailed Explanation of Chilmington Green Rent Charge Arrangements

Most new housing developments have similar arrangements to Chilmington Green, whereby residents pay a contribution to the upkeep of facilities and services on their development.

The two most common ways that private management companies can charge for management and maintenance services are through either an Estate Rent Charge or a Service Charge.

With the intention of preserving a high standard of ongoing management and maintenance across the entirety of Chilmington Green, whilst protecting residents from spiraling bills, an estate rent charge system was applied to all properties.

Rent Charge Deed 1

The charge for Rent Charge Deed 1 is set on the number of bedrooms a property has.  The charge for RCD1 is capped and increases by RPI (retail price index) each year.  The CMO has the ability to charge up to this cap and informs residents of its intentions in February/March each year when it bills residents for the new financial year.  The CMO cannot charge above the capped amount. Therefore, the RCD cap provides residents with protection from spiraling bills, which is a positive attribute when compared to Service Charges.   (please see additional information under RCD2).

The use of the Retail Price Index is identified in the legal Rent Charge Deed document. The CMO must therefore use this index as the source of calculating a relevant annual increase to the rent charge amounts.

Rent Charge Deed 1 income is charged from the date of the completion of the property sale.  Any unspent monies at the end of the financial year are moved into Reserves to support the long-term management and maintenance of community assets (whether they are built yet or not). NB this applies to all Rent Charges

RCD1 charges are used to look after strategic landscaping and community assets for the whole of the development, typically defined as assets that will be for the benefit of everyone.  This includes play spaces, the Community Cabin, sports pitches and allotments.  RCD1 charges are also used to manage the company (RCD collection, audit, production of accounts, etc) and currently cover the fees charged by RMG for carrying out the specialist functions relating to estate management.  RCD1 income is collected from all properties for expenditure across the entire Chilmington Green development with the aim of providing the same level of maintenance estate wide.

Rent Charge Deed 2

RCD2 is the rent charge deed that enables the CMO to enforce against the estate covenants.  This includes; nuisance (noise or other disruption to other residents), adequate maintenance to the exterior of your property/fencing and parking (eg. not parking in inappropriate locations or housing of caravans and boats on driveways).  The purpose of these enforcement abilities is to ensure that the whole development is kept to a good standard for all residents to enjoy.  There is a process for the CMO to follow ahead of commencing formal legal proceedings, so residents can be assured that there will be ample opportunity to correct any breaches.  A full list of enforcement elements and more information can be found within your RCD2.  A blank template copy can be found as a download link below.

This rent charge deed also offers the CMO the ability to formally request an increase to RCD1 after 2030.  The RCD1 cap can be increased by up to 20% by the passing of a vote at an AGM/EGM of CMO members.  This cap can be increased once every 10 years.

RCD1 amounts were calculated prior to the formation of the CMO following detailed consideration of management and maintenance costs for all assets that would arise during the build out of the development.  The aim was to avoid high increases to charges as more assets were delivered, whilst recognising that in the early years there would be low housing numbers and fewer assets.  This calculation was undertaken with the best intention of protecting residents from spiralling rent charges whilst preserving a high quality environment.  It was, however, recognised that not all scenarios can be anticipated, particularly in regard to legislative and environmental changes and therefore the ability to ask members for up to a 20% increase cap was required if income from RCD1 fell short of actual costs incurred as time progresses.

 

 

Rent Charge Deed 3

RCD3 is the charge which is responsible for providing the sums to manage and maintain more localised neighbourhood assets and the charge is variable depending on where you live.  The assets are deemed as those which are only of benefit to a few people and could include roads (typically where there are less than six properties), incidental feature ponds, and landscaping.

RCD3 is split into two types of charges.  Schedule 1 charges covers the neighbourhood assets, which are not considered to be of benefit to the entire development, such as small landscape features.  Schedule 2 charges are only applicable to properties that have vehicular access off of an unadopted highway or the use of a shared parking court.

RCD3 charges are fixed until 2025 when the CMO will review these charges to ensure they reflect the actual costs which have been incurred, up to this date, along with a nominal amount for future repairs and renewal.

Important information relating to all Chilmington Green Rent Charge Deeds

Please note, all properties located in Chilmington Green are subject to payment of a rent charge pursuant to rent charge deeds (RCDs) put in place at the time developers completed the properties. The RCDs obligate the owners of properties on Chilmington Green to contribute towards the maintenance of the green space and community facilities which Chilmington Green residents enjoy the benefit of.

The existence of the RCD will be noted on the registered title of the property and will bind any future owner of the property. In some circumstances, a properties title will also contain a restriction which requires any future purchaser to enter into a deed of covenant in which they covenant to perform the obligations contained in the RCD. The absence of a restriction does not mean that the RCD does not bind the property provided the RCD is noted on the title. Anybody purchasing a property on Chilmington Green should ensure that they understand the requirement to pay the rent charge and the consequences of non-payment. This should be explained during the conveyancing process.

Each rent charge has a fixed rent charge fee of £1 which is payable every year.

All three RCD’s also include clauses that enable the CMO to enforce non-payment of the RCD fees.  In the extreme, this can include repossession of the property (for home purchases before 2021 where an older version of the RCD was used). However, there is a legal process which must be followed in such cases and the CMO hope that residents will discuss any issues regarding making payments as they occur. For home purchasers using the new form of the RCDs, the CMO retain the ability to enforce against non-payment of the RCD but the ultimate sanction of repossessing a property is removed.

Where RCD sums continue to be unpaid with no payment plan in place, the CMO has the ability to put a charge on properties which means that any unpaid RCD sums will be collected when the property is sold.  We can also inform mortgage companies of the debt owed.  Residents should be assured that the CMO will only use these measures as a last resort but that it is important that all residents pay the sums owed to ensure equity across the development and to enable the CMO to carry out its roles and responsibilities.

We always encourage those struggling to pay bills to get in touch with RMG as early as possible so that we can work together to resolve matters.

Resident are welcome to contact the CMO for information regarding RCD’s but are always advised to seek their own legal advice where specific queries arise.

 

Happy Christmas