Taylor Wimpey and the anonymous speculators in the Long Harbour ground rent fund have agreed to vary double ground rent leases to ones linked to RPI, it was announced this afternoon.
The announcement comes 11 months after LKP managed to get this issue to national attention.
The deal has been extended by Long Harbour, whose founder is Will Astor, to include Taylor Wimpey resale properties. That is, properties that have been sold on by the original Taylor Wimpey customers.
The initiative is the latest in a number of conciliatory manoeuvres by the developers and ground rent speculators to defuse the leasehold houses / onerous ground rent scandal.
Countryside Properties plc unveiled a similar deal with E&J Capital Partners last month.
The public quoted Ground Rent Income Fund plc, which appears to work hand in hand with Braemar Estates and shares the same offices, has also offered to vary doubling ground rent leases in its portfolio.
Those who agree to a deed of variation will see the ten-year doubling clause removed, and ground rent will instead rise at each ten-year review according to the Retail Prices Index (RPI) for the remainder of the lease term.
Other income streams – permission to sublet, park a van, move walls, built a porch or conservatory, change a carpet or perhaps keep a cat – will remain, however.
Indeed, they remain even if homeowners buy their freeholders which is why leasehold house owners term these consent fees “fleasehold” and are demanding their removal.
Adding insult to injury, leasehold home owners have to pay £80-100 even to get a response from ground rent management companies such as HomeGround, which serves the Long Harbour freeholders.
Long Harbour manages the murky Adriatic Land portfolio, where the ultimate beneficial owners hide behind nominee directors appointed by the Sanne Group, headquartered in Jersey.
To date, Taylor Wimpey has categorically refused to say how many toxic leases it sold and the scheme only applies to those leaseholders who choose to contact the company.
MPs at the All Party Parliamentary Group on leasehold reform were demanding that developers be summoned to the Communities Select Committee to give a clear indication of how many homebuyers are affected.
Sir Peter Bottomley talked of subjecting developers and ground rent speculators to the “Philip Green treatment”.
The following was received by LKP this afternoon:
I am writing to update you on the Taylor Wimpey Ground Rent Review Assistance Scheme, which we announced earlier this year.
We have been in constructive dialogue with freeholders representing the majority of properties built by Taylor Wimpey with a ten-year doubling lease and today, we are communicating the details of the first agreement to be reached, with Long Harbour and all of Homeground’s investor clients. By way of reference, Long Harbour is the investment manager and HomeGround acts as the ground rent asset manager for a number of third party companies that own the freeholds to these properties.
The agreement will enable qualifying customers to convert the ground rent terms of their lease via a Deed of Variation. If customers choose to proceed, their lease will be amended so that the ten-year doubling clause is removed, and their ground rent will instead rise at each ten-year review according to the Retail Prices Index (RPI) for the remainder of the lease term. 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.
As you know, the objective of the scheme has been to resolve concerns around saleability and mortgageability of properties with this type of lease, and based on discussions we have had with major lenders, we are satisfied that the terms agreed will address these concerns.
The total cost of the ground rent at the 50th year will be significantly lower than what it would have been under the original ten-year doubling lease, tackling concerns around the immediate affordability of ground rent. It is also expected that the revised lease terms will result in customers being in a much improved position from a cost perspective with regards to purchasing the freehold to their property, and removing the lease in the case of houses or extending the lease and extinguishing the ground rent in the case of apartments.
We will pay the freeholder for the Deed of Variation and also the reasonable legal costs incurred by Taylor Wimpey customers to have the lease terms converted.
As a next step, we have today written to all Homeground leasehold customers who are registered on our Scheme, outlining the terms of the agreement. If they choose to proceed, we will start the process for the lease conversion. There is of course no obligation to participate, and if customers choose not to apply, their lease will remain unchanged.
The Taylor Wimpey Scheme itself is only available to customers who purchased their home directly from the company. However, we are pleased to confirm that Homeground has agreed to offer the same terms to second time buyers. As a result, these particular leaseholders will, under the same terms and arrangement, also be able to freely apply for the same Deed of Variation to their lease, under the Landlord Voluntary Scheme.
Over the coming weeks, HomeGround will be writing to all of their Taylor Wimpey leaseholders to inform them about the agreement. This will be done in a phased manner, development by development, and is planned to be completed within 9 weeks, ensuring that all customers who have the option of this lease conversion are made aware of it.
I hope this update is helpful and we will of course keep you updated as further discussions progress.