… for getting the service charge proportions wrong, resulting in 3.24% annual deficit
… for stitching up its customers by embedding Gateway in a tripartite lease (as has happened before with Taylor Wimpey London)
… It says it is trying to sell the freehold to leaseholders and will do so once the property tribunal comes out of lockdown
… And it is going to pay their right to manage expenses to get out of a leasehold mess of its own making
A cunning plan by Taylor Wimpey to flog off the freehold to the Radius site in Wandsworth to property punters investing in the commercial units below has come unstuck thanks to the leaseholders.
Taylor Wimpey had done a deal before completion to sell the freehold to Auster Limited but a hitch in the deal meant it had to be offered for sale under the “right of first refusal” under the 1987 Act.
In spite of the two-month time-limited offer being made just before Christmas in 2018, 94 of the 114 leaseholders decided that they wanted to buy the freehold, at which point legal flaws at the site came to light.
A year and a half later, the leaseholders are still waiting – in spite of Taylor Wimpey being a prime mover of the government-backed “Public pledge for leaseholders”. This involves the commitment to “ensure the process for leaseholders to acquire the freehold on their home or extend the terms of the lease is uncomplicated, transparent and fair”.
The Pledge came into being as the leasehold sector became discredited by the doubling ground rent scandal, which LKP exposed in late 2016. Taylor Wimpey was particularly culpable, and claims it has set aside £130 million to address the issue.
LKP has taken up the issue with Taylor Wimpey CEO Pete Redfern, and involved MPs including Communities Secretary Robert Jenrick.
Taylor Wimpey says (statement in full below): “We are entirely committed to progressing matters with the purchasing leaseholders.”
It explained that in September 2014 Taylor Wimpey sold the commercial leases to Auster Limited, whose directors are given as Peter Fabian Bloom and Anthony James Kaye, which also was interested in buying the freehold.
Taylor Wimpey says: “At that time there was no requirement to serve s.5 notices in relation to the freehold reversion and, as such, there was no breach of the 1987 Act.”
But then Auster Limited discovered “a previously unknown issue in relation to the way in which the residential and commercial leases were set up, which created a continual annual deficit in the service charge”.
The leaseholders claim that this amounts to 3.24%.
Auster revised its offer, which meant that leaseholders did indeed have the right of first refusal and, doubtless to the surprise and disappointment of all, overwhelmingly agreed to buy the freehold.
The leaseholders at Radius are also dissatisfied with the management of the site, where a tripartite lease exists – in another insider transaction – in favour of property management firm Gateway.
These leasehold carve-ups are widely deprecated, but Taylor Wimpey has previous form, flogging management to Chainbow, the property management company that then belonged to Roger Southam, who unaccountably was also chairman of the supposedly consumer-friendly Leasehold Advisory Service.
This unravelled at all Taylor Wimpey London sites thanks to the involvement of LKP and its patron MP Sir Peter Bottomley.
Taylor Wimpey is in a mess of its own making at Radius, and need a property tribunal decision to remove a Unilateral Notice (UN1) imposed on the freehold title by Auster Limited.
“As a result, we are unable to assist regarding a possible date for resolution,” said Taylor Wimpey’s spokesman.
“We have recently requested a further update from our solicitors who have advised that, as a result of the current COVID 19 crisis, the Tribunal has temporarily closed. I can assure you that the status of the Tribunal is being monitored and we will continue to advise the Leasehold Purchasers of any progress.”
As matters stand Taylor Wimpey is supposedly paying up to cover the 3.24% annual undercharging of service charges – if Gateway were to dare to send it as bill – so in acquiring the freehold leaseholders would have to agree to an increased percentage contribution in their leases.
Such is the situation at Radius that, the spokesman adds, “… Taylor Wimpey has made a commitment to underwrite the leaseholders’ reasonable legal costs associated with their RTM application.”
So the developer that did a bodged insider deal to flog the freehold; created a dodgy tripartite lease granting management to Gateway in perpetuity; got the service charges proportions wrong … is going to help fund the right to manage application of its former customers to make a new start.
Paul Ferner is a Radius leaseholder who worked tirelessly to organise the leaseholders to buy the freehold to a tight schedule. The matter was so overwhelming that he was not at his mother’s bedside when she died.
“Taylor Wimpey have been caught out, yet again, but their narcissistic entitled corporate culture means they cannot admit it.
“There is overwhelming evidence that they had no intention of selling the freehold to their customers and that the entire process was a sham as a deal had been sewn up with Auster Limited from the beginning.”
“Now it needs to resolve the expensive issue of the service charge proportions, which means rewriting the leases. Instead of doing this it thinks it can just flog the freehold for a bit less … and pass the problem on. This will simply be a curse for any future residents at Radius and is utterly irresponsible.”
Taylor Wimpey statement in full
Taylor Wimpey is aware of the situation at the Radius development and, as previously communicated to the residents’ association, we are entirely committed to progressing matters with the purchasing leaseholders. It is important to note that Radius is not subject to doubling ground rents as referenced in your email [LKP had not suggested that Radius did have doubling ground rents].
In September 2014 Taylor Wimpey entered into two separate Agreements with Auster Limited; 1. for the Sale and Purchase of the commercial floorspace and 2. for the freehold reversion at Radius. Auster were interested in the acquisition of the freehold due to their commercial asset interests in the development. At that time there was no requirement to serve s.5 notices in relation to the freehold reversion and, as such, there was no breach of the 1987 Act.
In December 2015 Auster completed the purchase of the commercial floorspace and, following completion of the development in 2016, were due to complete the contracted purchase of the freehold.
Following further due diligence, Auster identified and raised with Taylor Wimpey a previously unknown issue in relation to the way in which the residential and commercial leases were set up, which created a continual annual deficit in the service charge. As a result of the deficit, and with the obligation on the freeholder to cover it, Auster presented a revised offer in 2018.
As a result of changed terms and the fact the development was now complete, s.5 notices were issued to the residents in November 2018 in accordance with the 1987 Act. Taylor Wimpey were not aware of the service charge deficit until the matter was raised by Auster.
Taylor Wimpey, as freeholder, are committed to covering the backdated service charge deficit and will continue to do so until the freehold is sold, when the deficit will be reflected in the value of the freehold. We are in the process of agreeing what the service charge deficit is and hope to do so by the end of April (subject to availability of external parties). Cubism Law act on behalf of Auster, not Taylor Wimpey. However, Taylor Wimpey as freeholder, did approve the form of s.5 Notices via our solicitor DAC Beachcroft. Following receipt of the residents’ Acceptance Notice (AN), Auster’s solicitor challenged the validity of the AN, which resulted in a dispute between the residents’ solicitor and Cubism Law.
As a result of the issue of the ongoing dispute, Taylor Wimpey did not respond by the Statutory deadline of 26 April 2019, however subsequently, following an internal review, it was agreed that a contract would be issued to the Leasehold purchasers.
The Unilateral Notice (UN1) was not imposed by Taylor Wimpey; it was a request by Auster to reflect the existing contractual interest – so it is not quite correct to say it was a right of first refusal. Taylor Wimpey has applied for the UN1 to be removed from the title; this is a statutory process over which Taylor Wimpey has no control as it being managed by the Land Tribunal.
As a result, we are unable to assist regarding a possible date for resolution. We have recently requested a further update from our solicitors who have advised that, as a result of the current COVID 19 crisis, the Tribunal has temporarily closed. I can assure you that the status of the Tribunal is being monitored and we will continue to advise the Leasehold Purchasers of any progress.
In response to your service charge query relating to the annual shortfall. The freehold purchaser/s will be responsible for any future shortfall from completion of the freehold. This is reflected in the reduced price of the freehold negotiated by Auster and subsequently accepted by the purchasing leaseholders via the AN.
As such the acquiring leaseholders would be obligated to cover the deficit post completion of the freehold acquisition. Leaseholders have been paying less for their service charge than they would have if the percentage contributions had been set up correctly at the outset.
Rectifying the error would require every leaseholder in the development to agree to an increased percentage contribution in their lease and would not seem entirely necessary given that the freehold acquisition price reflects the existence of the deficit.
For completeness, I confirm that, in parallel with the above, Taylor Wimpey has made a commitment to underwrite the leaseholders’ reasonable legal costs associated with their RTM application. We agree that this is an unfortunate matter; however, it does not warrant Taylor Wimpey’s withdrawal from the “Public pledge for leaseholders”.
We remain committed to resolving the situation as soon as we can, and we will continue to keep the residents updated.