Ellesmere Port & Neston MP, Justin Madders has written to developer Taylor Wimpey to express disappointment. He was contacted by constituents who had been notified that their ground-rent will be doubled in July this year, despite an offer being made by Taylor Wimpey to remove the onerous doubling terms.[su_box title=”LKP Comment” style=”bubbles” box_color=”#2f22c7″ radius=”8″]LKP has been raising the same issues with Taylor Wimpey (TW) as leaseholders try to understand the impact of the ground rent “assistance” scheme. It is assumed that TW will seek to create a deed of variation to change leases so that the ground rents only increase in line with RPI. What is not know is whether the RPI will be deemed to apply from the original lease date, or if it will be allowed to double first in some cases and then change with RPI in subsequent years. This is of considerable concern because this is obviously critical to the leaseholders’ position.
For example, for a lease which started in 2006 for every £100 of ground rent which doubles after 10 years this would obviously have become £200. For the equivalent RPI lease with the same review period the amount would have become £138. The methodology agreed by TW will have a direct impact on future costs and in the case of the leasehold house owners the cost of buying their freehold. These decisions may also have a direct impact on the value of the leaseholders’ homes and potentially their ability to sell their home in the future.
One other key question yet to be answered is how many homes are affected since Taylor Wimpey is not the only developer with this problem. While LKP has been chasing this issue for years we have seen no action from officials in the Housing Department (DCLG) until the end of 2016. Under a Freedom Of Information request made by LKP earlier this year we asked DCLG to confirmed how many meetings they had had with the developers to consider any leasehold issues in the last year. We also asked for the minutes of those meetings.
DCLG advised that they had held just one meeting.
By coincidence that meeting happened to take place just the day before the APPG meeting to consider the ground rent problem. The APPG meeting itself had been urgently scheduled with full support and agreement of senior DCLG officials just two weeks earlier.
The minutes of the DCLG meeting with developers, 13th December 2016, show that they were asked to inform the department about the number of 10 year doubling ground rent sales. They were not asked to provide information on other doubling ground rent terms which have now been excluded from the lending policy of groups like Nationwide. We do not know what answers were provided by the developers. Although DCLG may now be aware of the total size of the problem, that information has not been passed on to ourselves or the APPG. [/su_box]
Mr Madders points out that when TW announced their £130m compensation scheme, they acknowledged that the contracts were “not consistent with our high standards of customer service and we are sorry for the unintended financial consequence and concern that they are causing”.
The residents were informed of the increases by the current freeholder, E&J Estates. When they queried the planned rise, drawing attention to the Taylor Wimpey offer, E&J told them that they have not yet been contacted, so the increase would still be going ahead.
If implemented, the increase would not only impact on the annual amount repayable, but also on the value of the freehold of the property and the likelihood of a resale. Madders called on Taylor Wimpey to act urgently to prevent already disadvantaged leaseholders from losing out once again.
Justin Madders MP has described the sale of leasehold houses as the development sectors’ equivalent of the PPI scandal and said:
“I am extremely disappointed that Taylor Wimpey have done nothing to help my constituents since announcing their compensation scheme several months ago.
“Taylor Wimpey have acknowledged that they got it wrong and seriously let down people who bought their homes in good faith. The fact that leaseholders are still facing huge increases adds insult to injury and is completely unacceptable.
“We need to see urgent action to address this issue. How many times do leaseholders need to be let down before Taylor Wimpey get a grip of the problem?”