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Rent charges
A rentcharge is any annual or other periodic sum charged on or issuing out of land, except (a) rent reserved by a lease or tenancy, or (b) any sum payable by way of interest (s1 of the Rentcharges Act 1977). Section 2 provides that no rentcharge may be created whether at law or in equity after coming into force of this section. However, a rentcharge created for the purpose of meeting, or contributing towards, the cost of performance of covenants for the provision of services, the carrying out of maintenance and repairs or the making of any payment .. for the benefit of land affected by the rentcharge is permitted so long as the sum is reasonable (s2(3)(c), 4(b), (5)).
In this case the rentcharge related to rates in respect of the common parts and all expenditure incurred in or about the maintenance and proper of convenient management of the estate. The claimant owned and managed the common parts of an industrial estate. The defendant was the freehold owner of one of the units.
The CA held that the payments were valid rentcharges. The payment of rates benefited the land. The covenant did not have to expressly stated that it was limited by a requirement of reasonableness.
Orchard Trading Estate Management Ltd v Johnson Security Ltd [2002] EWCA Civ; [2002] 15 EG 132 (CS).
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