Taylor Wimpey avoided having to offer leasehold flat owners the “right of first refusal” under the Landlord and Tenant Act 1987 because it sold the block before more than half the flats were sold.
The issue was raised by Sean Greenwood, whose wife owns a two-bedroom leasehold flat at Goodrich Mews in Gonal, Dudley.
Mrs Greenwood, a first-time buyer, paid £101,000 for the shared equity flat in 2010 (Taylor Wimpey owns 15% of the property).
Under the Greenwoods’ 125-year lease the ground rents double every ten years starting at £250pa. In three years’ time it will be £500 a year (on top of £840-a-year service charges), rising to £8,000 from 2059.
Mr Greenwood estimates that over the life of the lease the freeholder raise £21,672,000 in ground rent from the 32 apartments.
The reply came from Cheryl Parsons, Taylor Wimpey’s head of customer services who also appears to be the spokesman for the company’s £130 million Ground Rent Review Assistance Scheme.
“In this case, please note that there was no requirement for Taylor Wimpey to offer the right of first refusal to residents of the Goodrich Mews apartments because the company was already contracted to sell the freehold to the apartment block to a third party before a ‘requisite majority’ of qualifying tenants had purchased units in the block.
“As you may be aware, the Landlord and Tenant Act 1987 defines a requisite majority as 50% +1 of the units on a development. We confirm that the contract to sell the freehold to the apartment block exchanged prior to the sale of the 50%+1 unit.
“As we mentioned previously, the Ground Rent Review Assistance Scheme has been introduced voluntarily by Taylor Wimpey to allay concerns that have been raised by our customers regarding the possible saleability and mortgageability of their home.”
Mr Greenwood forwarded the reply to media and MPs.
“What is the point of having a law to protect leaseholders that has such a huge loophole in that developers know about and are clearly using?” he asks.
“The residents were notified that the freehold had been sold in writing on March 29 2012 [see below].
“The three blocks of apartments were completed in late 2009, 2010 and 2011 respectively, with the apartment sales being agreed long before these completion dates. Taylor Wimpey is either lying about the freehold sale date in order to circumvent the law or had agreed the sale of freeholds long before the apartments were sold without disclosing the ownership structure to potential buyers.
“I have asked Taylor Wimpey to prove the freehold sale date as evidence that the law was not broken.
“Taylor Wimpey’s ex customers continue to be trapped in homes that they want to sell, but cannot.
“We are now being told that there MIGHT be some progress on varying the leases by the end of the year.
“Thousands of people’s lives are on hold due to the mis-selling of homes.
“Nobody would have bought a leasehold property if the implications and future costs had been fully explained. Like PPI mis-selling, people need to be compensated so that they are in a position to move house if they choose or buy their freehold and move on with their lives.
“What should have been a dream of owning a first home has turned into a daily living leasehold nightmare.
“We are suffering from something that is close to your heart: a greedy freeholder with a punitive lease that prevents us from selling our apartment.”
Related posts:
Adriatic Land now wants £54,000 for my freehold that Taylor Wimpey said would cost £6,000
Taylor Wimpey more greedy than the ground rent ‘Mr Smallweeds’ (and so are other plc housebuilders)
Taylor Wimpey ‘stretches credulity’ by refusing to list properties sold with doubling ground rents
Telegraph reports case of Taylor Wimpey pensioner who has paid £38,000 for his freehold … and now won’t help him
MP urges Commons to condemn developers selling leasehold houses with onerous ground rents. And names Taylor Wimpey, Persimmon, Bellway and Adriatic Land …
Much of leasehold law, perhaps too often for coincidence, is written in such a way to leave glaring signposts to freeholders saying: “To avoid this obligation take the following easy, entirely free steps:”.
Whereas for lessees, the law usually says, “To enjoy this right, pay the freeholder all his/her costs and never be sure which way the court will decide”.
And where the legislation doesn’t give the standard freeholder loop-hole, the courts seem to bend over backwards to find one, as in s20 financial limitations (need of lessee now to prove prejudice after Supreme Court’s Daejan Investments v Benson [2013]) and ability of landlord to get dispensation after the fact. Pretty worthless s20 protection if its a costly lottery an not an unambiguous right such as, oh I don’t know, a clear financial limit that always applies.
Likewise the bizarre change in RTM multi-block legal interpretation in 2015. CoA bent over backward
seems to me to accept excuses such as lessees might seek RTM on blocks in different parts of the country… and that was going to happen …or leaseholders cannot manage be trusted to manage other blocks fairly, even though they have no say at all over how the landlord manages their blocks without RTM and all flats in all blocks could join their RTM company and control how it was run. Company law gave them more transparency and rights than leasehold law ever does in practice.
Odd how leasehold rights are rather easy to side-step? Anyone would think it was deliberate on the part of the Commons committees that tear draft legislation apart? MPs in favour generally seem to see only the headline claims of an Act and ignore the actual detail?
I look forward to TW providing Mr Greenwood with the evidence of the Freehold sale date…… ‘This whole Leasehold marlarkey and the Spivs who attempt to shaft leaseholders at every opportunity is not so much a ‘Comedy Of Errors’ but more a ‘Cesspit of venality and Jiggery- Pokery’. It has to end!!
Of course a very easy way to side step legislation (that was meant to protect leaseholders) is simply to put the freeholds into a company and sell the company that owns the freeholds.
” Where a landlord is proposing to sell his interest in a building containing flats in relation to which the RFR exists, he must, by law, first offer it to the tenants before offering it on the open market. He must serve formal notices on the tenants telling them what he is intending and must provide time for them to consider the offer; he cannot sell to another party during that time , nor offer the interest to anyone else at a price less than that proposed to the tenants or on different terms. Breach of these legal obligations by the landlord is a criminal offence. If the landlord sells without providing the Right of First Refusal, the tenants can serve a notice on the new owner demanding details of the transaction, including the price paid; they can then take action to force the new owner to sell to them at the price he paid.” Extract from introduction LEASE advice-guide/right-of-first-refusal.
” Breach of these legal obligations by the landlord is a criminal offence. If the landlord sells without providing the Right of First Refusal, the tenants can serve a notice on the new owner demanding details of the transaction , including the price paid; they then can take action to force the new owner to sell to them at the price he paid.”
Extract from letter written in February 2017 by Gavin Barwell MP as Minister of State for Housing..
Gavin Barwell lost his seat at Croydon Central and is now serving as Chief of Staff to Theresa May.. His comment in a formal letter of reply was taken verbatim from the LEASE guide as above.
There is a mandatory requirement for all public officials (and I consider LEASE staff as such) to uphold the law unfailingly, and at all times. However, as seemingly admitted by Roger Southam, he and his LEASE colleagues have little or no interest in pro-actively championing their own paperwork..
Which brings us again to the culpability of colluding solicitors/counsel. Who advised TW in connection with the above letter to Mr & Mrs Greenwood ?
It seems that the letter Mr and Mrs Greenwood received from the TW Head of Customer Services contravened the guidelines of both LEASE and the then Housing Minister.
Now would be a good time to put this evidence to LEASE to see if they will deliver the help and advice they have been set up to give.
The sale of the freehold is of course an issue. But the ground rent which doubles every 10 years is the major problem here, as presumably the apartment is now unsaleable. An absolute scandal. Not sure why but I had the impression these horrendous ground rent terms were mainly written into TW leases for houses. TW have scammed flat owners as well. Truly shocking.
Ian. It is unfortunately common practice for flats, especially Government Help to Buy new builds for doubling ground rents. Government supports big builders not homeowners.
,New 125 year leases are also a problem. because of the extra costs extending the lease. Nationwide won’t lend on doubling ground rents and 125 year leases but amazingly the govt and big builders keep on cashing in and TW’s share price keeps rising.
What’s the problem with 125 year leases Joe I thought they were OK as they don’t need extending for 45 years ? Have Nationwide really refused to lend on them if so what is their minimum lease term ?
Just been looking at Nationwide’s website:
Flats and Houses – a minimum unexpired lease of 55 years is required at application with a minimum unexpired lease term of 30 years after mortgage term ends.
However for New Builds then minimum lease is 125 years for flats and 250 years for houses.
Ian, The leasehold scandals were born through a virus that afflicted leasehold flats and then as developers/freeholders/managing agents saw a chance to turn a quick profit infected houses as well.
this is further evidence- if need be- that the entire legislation is a one-sided legalised “scam”; Residential leasehold cannot be reformed (we’ve had at least 3 reforms over last 3 decades); Should be abolished; I urge everyone to write to their local MP -and keep writing- asking them to act i-e make sure a Bill is introduced in Parliament to abolish this feudal system. Scotland did it; Northern Ireland/Stormont did; We can do it!
Tremendous things here. I’m very happy to peer your post.
Thank you so much and I’m taking a look forward to touch you.
Will you kindly drop me a e-mail?
I like what you guys tend to be up too. This kind of clever work and reporting!
Keep up the terrific works guys I’ve you guys to our blogroll.