Housing developer Taylor Wimpey has had to set aside £130 million to settle lease rows. The company has had numerous complaints due to leases attached to properties that were sold between 2007 and 2011.
What were the issues with the leases?
Ground rent is a payment paid by the leaseholder to the freeholder of the land on which the property is build. The payment covers upkeep of common parts of the land such as communal gardens. Many leasehold properties have a clause to pay ground rent usually annually, but the payment can be made more frequent than that. The amount of ground rent can vary lease to lease with some modern flats having to pay £300 per year, compared with ex local authority flats which can be as low as £10 per year.
In relation to some Taylor Wimpey properties, it has been established that some homeowners face their ground rent charges doubling every 10 years. This means that after owning the property for 50 years the leaseholder would have to make a payment of £9,600 per year for 10 years to the owner of the freeholder. It is understandable that homeowners, upon realising this, have made complaints to the company. Ground rent clauses can make homes almost unsellable as mortgage lenders will often not offer mortgages against them. MP's have recently attacked the developer calling the blunder 'the PPI scandal of the property sector'.
What will happen now?
Taylor Wimpey have carried out a review and admitted that the impact of the clauses is an understandable concern for its customers, issuing an apology to all those affected. Unfortunately it is common that developers sell the freehold onto third parties, as is the case with Taylor Wimpey and some of the properties in question.
The developer has said for customers who acquired the leasehold, and remain the owner of a Taylor Wimpey property which is subject to the doubling clause, the company have entered into negotiations to alter the terms of the lease. The negotiations will take place between the respective owners of the freehold, with the company hoping to agree on less expensive ground review terms for the leaseholders.
Taylor Wimpey will be bearing the financial cost for this, but there is no guarantee the end result will be what their customers are hoping for. They have said that where they are not able to reach an agreement with the freeholder they will pursue other avenues for their customers. The £130 million they have set aside will be recorded as an exception item on their accounts for 2017.
I have a Taylor Wimpey leasehold property, am I affected?
Taylor Wimpey have made a statement concluding it is customers in the North-West and London that have been mainly affected, however refused to give a figure of how many customers were subject to the doubling clause. The starting point if you are concerned you could be affected is to check over your lease or equivalent information in your deeds. If after inspection are still unsure whether you could be affected, then it is worth contacting the solicitor or conveyancing firm that undertook the work for you.
As part of the conveyancing process a solicitor will investigate the property that is being purchased for any restrictions or relevant information that could affect it in the future. They will then report back with their views to inform their client fully before the buyer is committed to the purchase. Ground rent and any relevant information in relation to this should be part of that report, should anything be untoward.
For more details on any property related issues, please contact us on 01603 693500 or email us using the 'Make an enquiry' form. Appointments available at our Norwich, North Walsham, Brooke and Sheringham offices.