This afternoon Pete Redfern the CEO of Taylor Wimpey has responded to the All Party Parliamentary Group on leasehold reform saying that the issue of homeowners with doubling ground rents is under “review”.
Mr Redfern’s full letter is below.
He points out that the doubling ground rent leases, which LKP is aware apply to leasehold houses as well as flats, was introduced in 2007 and discontinued at the end of 2011.
Since then properties have been sold with ground rent increases linked to the RPI.
[pro_ad_display_adzone id=”11500″ ajax_load=”1″ align=”right” info_text=”Advertisement” info_text_position=”above” font_size=”11″]
“The concern of some customers and home owners with regards to these pre-RPI clauses and the difficulties that they are currently experiencing in selling or mortgaging their homes, has only recently been brought to our attention,” writes Mr Redfern.
“Having heard the cases described and in order to establish the facts, we are undertaking a review of these.”
Mr Redfern, who tells Sir Peter “We are grateful to you for raising this issue”, adds:
“Please do feel free to forward any correspondence you receive from constituents on this issue to us and, of course, please do not hesitate to get in touch if you have any further questions at this stage.”
Sir Peter asks for a comparison of valuations between leasehold properties with ground rents doubling every ten years and those with ground rents rising with RPI.
He also wants to know why some of these properties are houses and yet were built with leasehold tenure.
“Have some innocent purchasers be shafted?” he asks.
Mr Redfern claims that during 2007 and 2011, when these leases were sold, “the average difference in capital value compared to an RPI lease was slightly less than 1% of the average sale value of the property”.
I am contacting you about the session you held on Wednesday 16 November regarding issues relating to a number of leasehold properties, that may have been raised by your constituents.First of all, we share your concerns about recent reports in the media regarding certain ground rent terms on leasehold properties and the worry this is causing some home owners. The concern of some customers and home owners with regards to these pre-RPI clauses and the difficulties that they are currently experiencing in selling or mortgaging their homes, has only recently been brought to our attention. Having heard the cases described and in order to establish the facts, we are undertaking a review of these.We are, of course, conscious that this could be a worrying time for home owners, not least since it is a very technical area. We cannot talk for other house builders, but from a Taylor Wimpey perspective the leases in question were introduced in 2007. At this point the average difference in capital value compared to an RPI lease was slightly less than 1% of the average sale value of the property. We reviewed this mechanism for ground rent increases in 2011 and decided that RPI was a more appropriate measure going forward. We would therefore like to confirm that all Taylor Wimpey homes on developments that commenced after 2011, have been sold with ground rent increases linked to the RPI, so our understanding is that the timeline for properties potentially affected relates to those sold between 2007 and 2011.
We are reviewing the cases which have been brought to our attention so far and will ensure that further details are shared with you in due course.
Please do feel free to forward any correspondence you receive from constituents on this issue to us and, of course, please do not hesitate to get in touch if you have any further questions at this stage.
We are grateful to you for raising this issue.
It is good to see that Mr Redfern has given a full reply.
We will have to take his word that Taylor Wimpey were ignorant of the dire situation their customers have been been put in.
To some extent they must have realised this in 2011 when they ceased “shafting” these “home owners”.
The old Taylor Woodrow mottos were. Teamwork, Get it Right First Time and The Customer Comes First.. How times have changed.
I notice on the Taylor Wimpey website there is a definition of Leasehold in the Home Buyers Glossary.
It reads like this:
“The land on which your property is built is owned by someone else known as the Freeholder and whilst living in the property you will be required to pay them a small amount each year. Leases are most commonly found in association with flats.”
Is this the sort of information those unfortunate purchasers received.
What is also interesting here is that Taylor W are creating Commercial Residential Leasehold, which is a total move away from Residential Leasehold.
The differences will be…
Now this Lease Witnesseth – v – Now this Deed Witnesseth
Ground Rent rising every 10 Yrs not 21 and/ or 33 Yrs.
The Yr 2007 appears to be when Mortgages became securitised with a number of Co’s (based on the E&J cartel) jumping ship and forming even more shell Co”s
The E&J cartel have also been placing additional Charges via Co’s Hse without disclosing the same to the Lessee purchaser. Taylor W, & Bellway (who have been changing their name to E&J which ever No.) have been actively doing this since about 2007/8 – connection?