By Joanne Darbyshire
To Peter Redfern, Taylor Wimpey CEO
cc Irene Dorner, Taylor Wimpey, chairman
Dear Mr Redfern,
I read with interest your press release of 22/12/21 headed “Agreement of voluntary undertakings with the CMA” in which you are quoted as saying: “Taylor Wimpey has always sought to do the right thing by its customers, shareholders and other stakeholders, and we are pleased that today’s voluntary undertakings will draw this issue to a full close, within our original financial provision.”
CMA Leasehold Investigation Closure ‧ Taylor Wimpey
An update from Taylor Wimpey On Wednesday 22 December 2021, Taylor Wimpey plc announced that the CMA’s investigation into the historical sale of leasehold properties with doubling ground rent clauses by the company is closed, following the agreement of voluntary undertakings.
I have also perused your website where your update page on the CMA leasehold investigation closure states that “Taylor Wimpey has worked with the CMA constructively throughout their investigation with the desire to fully close the issue for the benefit of our customers and affected leaseholders.”
I take a great deal of personal pride that my years of campaigning against your abhorrent introduction of onerous leases with seemingly no regard for your customers has finally resulted in you being forced by the CMA to do the right thing.
I take huge issue with your quote in the December press release about doing the right thing by your customers. Let’s be very honest here – if you had always sought to do the right thing by your customers, then you would never have started unnecessarily selling houses as leasehold, and would certainly have taken action against doubling leases like mine when we first started our campaign. Instead, you introduced your GRRAS scheme to convert doublers to RPI. You thought that this was what you needed to do to get away with it. I am delighted that you haven’t.
Interestingly, on your website the response to the question “I have an original RPI-linked lease, does this mean RPI is not fit for purpose?” is “Not at all. The use of RPI-linked leases is a nationally recognised and long-established measure and is the most commonly used index for price increases across the leasehold residential sector. The CMA’s investigation did not include original RPI-linked lease types.” I can categorically assure you that RPI leases with the high starting ground rents you decided to use to maximise profits are also not fit for purpose. Ground rents are a charge for no service and I would ask your legal team to check your assertion that RPI leases are “long established”. Whilst RPI may be the most commonly used index for ground rent price increases from the time you and the rest of the developers realised you can generate a second income by creating an asset class on our homes, ground rents were traditionally a peppercorn and didn’t increase at all. Onerous leases with high initial ground rents and RPI rates of increase are a relatively recent and unwelcome phenomenon resulting from your and others greed. If you truly want to do the right thing by your customers you would address these leases too, before you are eventually forced to, particularly where the level of ground rent creates an Assured Shorthold Tenancy.
In terms of my own journey to escape the nightmare you created and finally own my home, I finally bought the freehold in December 2021. I paid considerably more than the c.£5,000 your salesperson told me it would be. Over the years I have suffered financially over and over again. If you truly want to do the right thing by me then here is what you will do:
Refund all costs that I have experienced since this started. I have had out of pocket expenses of £980 relating to legal and valuation costs.
Refund the 11 years of ground rent that I paid (£3,350 – 10 years at £295 and 1 at £400)
Refund the difference between what I paid for my freehold and the £5,900 figure you quote on your website that you are selling the doublers for where you are still the freeholder (£2,562)
Compensation for the hours and hours away from my family to campaign for justice and the untold stress and worry that this whole sorry saga has caused me
It is clear that after agreeing undertakings with the CMA you consider the matter closed. I can assure you that, until you put me back in the position that I would have been in financially had your salesperson not deliberately withheld information that was critical to my decision making, I do not. Had I been properly informed at the point of sale I would have bought the freehold from you at that point for £5,900. Thus, to do the right thing by me, you will recompense me as detailed above. I will then, too, be pleased to “draw this issue to a full close”. I am sure that this can be accommodated within your original financial provision.
Yours in anticipation of you “doing the right thing” (eventually),
You state : “ground rents were traditionally a peppercorn ”
That is an inaccurate statement. Large swaths of terraced houses in industrial areas were sold around the late 19th century and early 20th century with ground rent of around £1 to £2 per annum – you believe that to be a peppercorn sum – they are now, but not then, That sum was typical of an industrial weekly wage at that time-today around £350 to £600
What is your argument to the following
You were presented with a draft lease that showed a ground rent of £295 and you signed the lease knowing that sum was to be paid ( the 10-year doubling aspect was not appreciated as it was not advised to you by the solicitor) you recognized at that time that to rid yourself of that sum you would need to pay a sum of a few thousand to do so, Therefore the obligation to pay that rent was part of the overall consideration the developer wanted and you understood the broad principle of a ground rent agreed to it. Clearly it will be for no service, it is a pure profit stream. Just as much as the last £5000 – £15,000 you paid for the property was not to reimburse the developer for the cost of the land or the labour and building materials it was for their profit and you received nothing in return for that £5,000 to £15,000.
Your anger is based on the hidden punch in the ground rent terms about the doubling aspect. I have always argued that the Net Present Value of the rent should have been shown next to the premium you paid using a discount rate set by the government. In that way, 10 year doublers would have never been accepted by buyers. The sum would have been so great that buyers would have withdrawn,
But where such terms don’t exist and the rent is either fixed, doubles every 25/33 years or rises by the RPI, what is the logic for it being abolished ? What wrong have developers done to warrant such treatment ?
I have suggested in response to the Government’s canvassing of comments on the new Ground Rent Bill that going forward on informal lease extensions (permitted under the New Bill) that a lessee be advised before signing the new lease what the NPV of the ground rent is so that they can understand that it is an integral part of the overall consideration that a freeholder receives and with that information they can evaluate any offers before committing to the new terms.
No ground rent full stop. The “consideration” payable can be reflected in the purchase price of the property, so clear to all. No unnecessary 3rd parties in peoples homes extracting unearned fees. As the letter says, RPI increases are mainly a recent phenomenon from the last 20 years. With RPI currently at 7% so it is not a good deal (equivalent to 10 year doubling).
Informal lease extensions and freehold purchases will probably be removed in part 2 of the leasehold reforms.
Simon, the consideration only exists if the property is sold leasehold, and at a supposed discount. The reality is that leasehold properties are not sold at a discount to like for like freehold properties.
I think that Sebastian has, on more than one occassions, suggested that the market should decide the price of a house, doing away with the supposed discount for leasehold properties. For some reason the freehold industry doesn’t like this idea.
Crispin Blunt (The well known revolutionary communist) 1/ “I advocate there should not be any ground rent as property title should be either freehold or commonhold in the future.” 2/ “Titles to people’s home is demonstrative of their ownership to their home that is to serve as a physical shelter and emotional safe haven for the family. Shelter and security is a fundamental need.”
It is actually quite difficult to get really angry about our leasehold laws because they are just one of numerous outrageous things that exist in 21st century UK. Leasehold is morally criminal and obscene – but so are many other things alive and well and thriving in this country. Who is to blame for the continued existence of these laws? Look no further than government, and not just this government, and not just Tory governments – though Tory governments/politicians are particularly to blame. Do you reallly think that THE LAWYER Keir Starmer would be so righteous and bold to abolish leasehold?
Leasehold is a cross party issue that needs cross party solutions. All parties have allowed this to continue. BUT now enough is enough. Time to ABOLISH NOT POLISH
Deborah Ellen Wilcox
The fact of the matter was that although Jo knew there was a fee for ground rent, she was intending to buy the freehold for £5900 after two years – as advised by the salesperson at point of purchase.
People were told they couldn’t buy their freehold for two years as new build properties had to initially be sold as leasehold by law.
This was a deliberate LIE and just a money-making scam cooked up by the developers.
During the two year period the freehold was sold to ”investment companies” ( very often companies created by the developers themselves! ) in Tax havens like the Virgin Islands
Many greedy developers operated in the same way – so legally but immorally.
When people like Jo wanted to buy their freehold for the amount promised the new owners then wanted tens of thousands of pounds!
This is a complete and utter scam and this is just a brief outline of how people were duped. Nasty, nasty business and Jo ( and many others ) have had to battle to get justice in an unfair system rigged against them – all because they purchased a new build home
Had the value of the ground rent been disclosed properly before contracts were exchanged, then the problem of the 10 years doubling ground would have been clear to see
The NPV (or expressed another way the amount to rid yourself of the rent) in this case some £35,000 would have lept off the page if the value of the ground rent discounted at say 5.5% had been shown next to the premium in the lease. So the total price of the property would have been much higher than the premium and questions would have been raised and negotiations taken place.
The root of the problem in this case was the failure for the true value of the ground rent to be disclosed. It is a failing on the part of those that sold the product, a failure on those who were advising the lessee not to identify it and advise their client and a failure that there is no legislation to help have that figure quantified and disclosed
But it is an easy figure to have calculated and it should not be a Herculean feat to require that going forward that figure is calculated at the time of sale and a requirement for it to be disclosed.
The vast majority of ground rents are either fixed or double every 25/33 years or are linked to the RPI with figures around the £100 to £500 mark pa – this is not the stuff of nightmares. Contracts such as these should not be retrospectively varied, as to do so undermines the legal integrity of contracts conducted in this country, which is regarded on the world stage as a stable country to do business with.
If lessees were given the right to extend their leases keeping the same ground rent terms as has been suggested the cost of extending a lease would indeed be cheaper, easier and quicker
Joanne’s comment is correct in every respect. Historically, ground rent was a peppercorn levied by the Crown to enable the freehold title of land to pass from the Crown to a freehold landowner. This was more often in perpetuity as a favour/award or for a large sum of money – which the Crown always needed! Existence of a peppercorn rent confirmed the land was Crown land and would always remain so. The new owner could enjoy sole title “freely”. and
parcel the land out to tenants for a commercial rent or build houses on it for the same purpose as he saw fit. Tenants were always liable to rent increases and the “land owner” reserved the right to forfeiture for non-payment. Meantime, the peppercorn ground rent paid remained ever the same.
So it was thus, from medieval times until…
…the unscrupulous arm of this unregulated industry was exposed and existence of various scam’s (often criminal) outed. One example was the income stream created through Buildings Insurance charged to residential tenants at three to four times market cost. The ill-gotten gains produced from this nefarious activity could no longer be relied upon as property tribunals (LVT) enforced the already existing provisions of the Landlord & Tenant Acts.
But the unscrupulous were not to be undone, and along came the “informal” lease extension with a Deed of Variation allowing for Doubling or RPI Ground Rent (hitherto the peppercorn).
And to this day, unchecked doubling or RPI ground rent serves to supplant insurance and other scams as a primary or additional income stream.
It is for the enactment of long overdue and much needed reform that the Law Commission (LC) has laboured since 2017 and, finally, reported on in July 2020. The LC report was unduly delayed by repeated elections/referendum during this time, but now is the time, and…
..this is one great levelling up service Michael Gove can now provide for the many millions of existing and future leaseholders. We have been victims for far too long.
There was a recent sale of some 2500 leasehold houses where the leases were for a term of 999 years from the late 1800′ to the first few years of the twenty century – the house were modest terraced houses and the rents averaged between £0.75 to £1.75 per annum each property
Today they are hardly worth collecting and seen by some today to be akin to peppercorns. But back then it was about a week’s pay for a labourer and not a token sum. Today, adjusted for the effects of inflation they would be around £300 ~ £400
Regardless of this, what is the justification for removing existing ground rents where the terms are set out clearly in a contract. With only around 12,000 properties in this country subject to 10 year doublers, the rest are for sums much akin to the Road Fund Licence on a family car.
There is something profoundly wrong that a contract agreed over a period of a few months when the lessee has legal representation agrees to pay this annual sum. Then a few years later claims it was all too confusing and had no choice but to sign up and in any event was written in legal speak and should be removed. What would it mean for other contracts ?