Taylor Wimpey has apologised to leaseholders and set aside £130 million to sort out a problem with the terms of its leases for new-build houses which can see ground rents soar over the long term.
The house builder has just completed a review of its leasehold terms, focusing on a clause that sees ground rents double every decade until the 50th year, at which point the rent is capped.
This can mean that a ground rent of £300 a year would cost £9,600 after 50 years, causing financial hardship but also making it difficult for homeowners to sell their homes.
This arrangement was introduced in 2007 and was used until late 2011 when a new system was introduced linking grounds rents to inflation.
Taylor Wimpey says: “It is clear from our review that the impact of these doubling rent review clauses is now causing some of our customers understandable concern.
“We acknowledge that the introduction of these doubling clauses was not consistent with our high standards of customer service and we are sorry for the unintended financial consequence and concern that they are causing.”
In many cases, Taylor Wimpey has sold on the freeholds to these properties to third parties and it says that it is negotiating with the owners to alter the terms of the doubling lease to less expensive ground rent review terms.
If it can’t reach an agreement with individual freeholders, it will “pursue other avenues to help our customers”, with £130 million set aside by the group to pay for this.