Sir Peter Bottomley (right) has demanded that Taylor Wimpey explain its “unfair ground rent” provisions to the All Party Parliamentary Group on leasehold reform.
Yesterday he told fellow MPs at the APPG meeting chaired by Jim Fitzpatrick, Labour MP for Poplar and Limehouse:
“The ground rent increase may have been legal. It is clearly undesirable. I think it is sharp practice.
“A respectable company should rule out this practice as corporate irresponsibility.
“I’m going to ask when did this practice start; why did it start; and ask for names of the directors who approved it.
“I call for a public debate: Taylor Wimpey can either offer an acceptable defence of these practices, or apologize for the prejudicial arrangements. It then needs to say what is it going to do to put it right.”
The APPG heard evidence from Clair Scott, who bought a Taylor Wimpey leasehold house on an estate of 50 at Silver Birch Close in Lostock, Bolton.
Ground rents here double every ten years from £295 a year to £9,440 in 2060.
Sir Peter said: “£9,000 a year at 5 per cent is the value of the home. It is wiped out in 50 years. George Thomas, the former Speaker of the House of Commons stopped this practice 60 years ago. Yet now it has returned.”
Ms Scott told the APPG in Westminster:
“Buying a leasehold house in Bolton didn’t stand out as unusual to ask because most of the houses here, even the Victorian ones, are leasehold.
“We used the solicitors Taylor Wimpey recommended. We were told items like you can’t paint your front door for two years; you can’t keep a caravan on your drive; and you can’t have livestock on your land.
“These were the points that we remember about the process. We were told that the ground rent was £295 year.
“But it was only when we were trying to sell the property in September that this became an issue. We got to the point where at the last minute the buyers’ solicitors noticed the ground rent clause.
“It doubles every 10 years five times, which meant that by 2060 our ground rent on a house worth £200,000 is £9,440 a year.
“This is not something at all that we recall being highlighted when we bought the property. We looked at our solicitor’s report and ground rents were stated as an item on the title.
“But it was not draw to our attention that this was something unusual, or something to be concerned about and that we would have an issue in the future in selling property.
“Needless to say our house sale fell through.
“Numerous solicitors and estate agents are now saying they’ve never seen anything like this in a lease and that the house is going to be pretty much unsellable. We have been told that mortgage providers will not issue mortgages on this house.
“We contacted Taylor Wimpey and they said it’s not our issue anymore as we have sold on the freehold.”
Only 24 of the 50 houses on Silver Birch Close have doubling ground rents, the remainder have ground rents that rise with RPI (retail price index).
“This decision was taken randomly on January 16 2012 and no one knows why Taylor Wimpey decided to sell these houses with different lease terms. There has been no explanation.”
Ms Scott said the freeholds of the 24 houses were sold to UK Ground Rents Limited for £177,000.
Mr Fitzpatrick said: “This is obviously a very unsavoury practice which we thought had been stopped decades ago.”
Justin Madders, Labour MP for Ellesmere Port and Neston, has been deluged with constituents facing the same issue.
“Taylor Wimpey is going to have a very tough job explaining why they allowed this to happen and I think some very serious questions need to be asked of those professionals who advised on the purchase as well.”