Taylor Wimpey has announced in a recent trading statement that the “substantial majority” of its home buyers who are caught up in leases with escalating ground rents will be able to switch to fairer leasehold contracts.
In April this year, the developer apologised for a ground rent clause in some of its leases that doubles every 10 years, and set aside £130 million to pay for the terms of these leases to be changed to an inflation-linked system as part of its ground rent review assistance scheme.
Chief executive Pete Redfern says: “We have reached agreements with freeholders to enable the substantial majority of our customers with a 10-year doubling lease to convert ground rent terms to an RPI- [Retail Prices Index] based structure. Converting to an RPI-based structure addresses concerns about the mortgageability and saleability of these properties.”
However, the scheme is only open to homeowners who bought a property directly from Taylor Wimpey – so anyone who has bought their home from the original buyer will not be eligible.
Highlighting this point and a lack of transparency about the number of leaseholders affected by the ground rent scandal, Louie Burns, managing director of Leasehold Solutions, says: "On the face of it, many people might think that yesterday's statement from Taylor Wimpey shows the company is serious about making amends for having included onerous ground rent clauses in leases. However, many details remain shrouded in mystery and we have serious reservations about the offer.
"For one thing, Taylor Wimpey has refused to release data on the number of houses affected by the ground rent scandal, so we have no way of knowing how many people have accepted the offer or what proportion of the total this represents. With trust in Taylor Wimpey at an all-time low, the company should be transparent and we are calling for the actual figures to be released.
"Another serious concern with the offer is that it does not include any offer of restitution for people who did not purchase their house directly from Taylor Wimpey. These home 'owners' will still face onerous ground rents and the potential that their property may become worthless or unsellable as a direct result of the clauses that Taylor Wimpey included at the time of the initial sale. It is completely unacceptable that Taylor Wimpey is refusing to help all those affected by their scandalous lease terms."
Taylor Wimpey also revealed that it has performed strongly during the second half of 2017, with customer demand supported by a competitive mortgage market and the government’s Help to Buy scheme. Its order book currently has 8,751 homes (excluding joint ventures) and stands at around £2.2 billion – slightly down on last year’s figures (8,981 homes and circa £2.3 billion).
“Taylor Wimpey’s trading update is much stronger and paints a relatively rosy picture of the current housing market. Confirmation of favourable market conditions and high demand for new houses is good, although there are early warning signs that the situation might deteriorate, with slowing sales rates and a drop in its order book,” says Rebecca O’Keefe, head of investing at Interactive Investor – Moneywise’s parent company.
Read more about leaseholds in our Home & mortgage