This morning Pete Redfern, Taylor Wimpey CEO, was on the Today programme (BBC Radio 4) discussing the housing crisis.
This afternoon MPs are demanding he explain a housing crisis of Taylor Wimpey’s own making: building leasehold houses and flats where ground rents double every ten years.
This has left first-time buyers with homes that they cannot sell, or which have plummeted in value. Potential buyers have been refused mortgages, it is claimed.
In one estate of Taylor Wimpey houses in Heywood, Greater Manchester, ground rents rise from £295pa to £9,360pa.
The houses will have some value in the auctions, but none have sold for anything like what the purchasers paid Taylor Wimpey in 2012.
Sir Peter Bottomley MP, joint-chairman of the All Party Parliamentary Group on leasehold reform that meets this afternoon, has called on Mr Redfern to explain this company’s policy.
“Is there any reason to sell a new house leasehold except to put the new owner at a disadvantage?” the veteran MP asks.
“This may have been legal; it is clearly undesirable. I think of it as sharp practice.
“A respectable company, I believe, should rule out this arrangement as corporate irresponsibility.”
“Let us have a public debate, where Taylor Wimpey can apologise for their prejudicial arrangements. Or, can there be an acceptable defence?”
Many of the first-time buyers also bought these toxic assets with taxpayers’ assistance through the Helpt To Buy scheme.
A vote at last week’s of 550 delegates at the annual conference of the Association of Residential Managing Agents found members were “worried” that housebuilders were taking advantage of new buyers with exploitative lease terms.
In other words, leasehold professionals regard Taylor Wimpey’s conduct as beyond the pale.
In addition to LKP, the scandal has been reported by The Guardian newspaper, and it will shortly feature in a TV documentary.
There is no clearer example of a housebuilder building homes with an investment asset class built in, which could subsequently be sold off to ground rent investors, many of which are based offshore.
On the Today programme this morning Mr Redfern, whose pay is around £2 million a year, issued his report into housing.
He was asked by the Labour party to lead the study. He rejects help-to-buy schemes as inflationary, and says they should be restricted to first-time buyers seeking lower-priced homes.
He also calls for more rented property (as leasehold is just a long rental Taylor Wimpey is doing its bit here), and end the fixation with private homes.
“A fair housing market also needs both a healthy private rented sector and a supportive social housing sector,” says the report.
Home ownership fell 6.2 percentage points between 2002 and 2014 because fewer young people could afford to buy. House prices rose rapidly before the banking crisis; then credit constraints kicked in; and a constant driver was the decline in incomes of those aged 28 to 40 relative to older people.
Mr Redfern urges the setting up an independent housing commission, modelled on the new Infrastructure Commission, to provide long-term thinking on housing.
Mr Redfern was asked to carry out his report by Labour shadow housing minister John Healey, with former Monetary Policy Committee member Kate Barker and Andy Gray, former managing director of mortgages at Barclays.
Ms Barker carried out the report on housing affordability under the Brown government.
Related posts:
Pete Redfern tells LKP how Taylor Wimpey will sort the ground rent scandal
Taylor Wimpey to pay £130 million to solve doubling ground rent scandal
Taylor Wimpey’s Pete Redfern tells FT ‘we got it wrong on ground rents’
Sunday Times reports Taylor Wimpey ground rent scandal, as executives meet leaseholders
Taylor Wimpey CEO says doubling ground rent scandal under ‘review’. But Bottomley asks: ‘Have innocent homebuyers been shafted?’
Campaign against Residential Leasehold Exploitation and AgeUK reject Law Commission draft on exit fees
Taylor Woodrow was always a very respectable company, so I hope that Mr Redfern will take the necessary action to show that Taylor Wimpey maintains the high standards.
If he thinks selling leasehold to young families on a help to buy scheme is acceptable and his Ground Rent terms are fair then this issue can be resolved as follows. Without much financial loss to Taylor Wimpey, to restore their reputation and to solve the young families problem.
Taylor Wimpey should buy back these properties at a fair price. They can then either sell them again or rent them out and pay the so called “fair ” ground rent themselves. Perhaps they may prefer to purchase back those leaseholds they have already sold off..
The second alternative is to assist those young families to purchase the freeholds on their unsellable properties. Which will then make them more easily sellable.
The sooner they take action on this the better for all.
Dear Mr Redfern,
It takes years to build a reputation , but moments to destroy a reputation.
Could it be that your leasehold sales turn out to be Taylor Wimpey’s Ratner moment?
Remember, Mr Redfern, once your reputation is tarnished it never fully comes back.
There are many other developers also displaying unethical practices within this area. I own a newbuild Bellway property and am experiencing similar issues. Its a complete mess. We would never have bought the house if we knew what unreasonable costs they were going to subject us to. Bellway have sold our lease behind our backs and now the new company are charging a fortune for us to buy our Freeholds. Bellway should have been honest and informed everyone beforehand and at least then people would be able to make an informed decision weather to buy the freeholds or stay trapped in an escalating cost war that is unachievable and totally unfair. Its deceptive practice.
When we bought the new build we used the recommended solicitor from Bellway as we were advised it would be cheaper, quicker and seamless transaction. At no point did my solicitor highlight me to the fact Bellway could potentially sell my lease and I would be subject to whatever costs the new company want to enforce upon us. Solicitors have a ‘duty of care’ to act in a clients best interest. However to me it is questionable to who the client actually is? Its scandalous and I just want out of this mess.
From a Cramlington resident …
Good morning Sir Peter, I look forward to hearing more from the APPG on Leaseholds which met earlier this week.
I live in Cramlington in Northumberland, a new town which began its development in the 60’s by what is now Bellway and Persimmon homes.
The vast majority were sold as leasehold and only now, as leases reach a critical point in their tenure where mortgages are difficult to get if the lease has not been purchased or extended are people understanding how much of a trap they are becoming.
There are many new developments in Cramlington and in neighbouring towns and constituencies which have new build homes being sold as leasehold with one Bellway development charging £11,000 to purchase the freehold at the time of sale.
Annual ground rent if not purchased as freehold would be £299. These additional sums to purchase a house a really quite scandalous and unnecessary.
It makes it more likely for first time buyers who have to save for a deposit, to fall into the leasehold trap. I find it very frustrating that no developer is being held to account over the issue. Each time I’ve asked at a development why homes are being sold leasehold,
I’ve been met with a ‘They just are’ response as no one is able to justify the practice. I’ve contacted my local MP, Ronnie Campbell as well as neighbouring MP, Ian Lavery and Mary Glindon to get involved with the APPG as this issue also affects their constituencies.
I look forward to what the APPG is able to achieve and hopefully England can go the way of Scotland and abolish the practice. Kind Regards, XXX