By Harry Scoffin
Pete Redfern, the chief executive of Taylor Wimpey, this week told the Financial Times that his company “got it wrong” on leaseholds.
The newspaper reports that between 2007 and 2011, Taylor Wimpey sold properties with onerous leasehold terms, including ground rents that doubled every 10 years. The terms had the effect of preventing homeowners from selling on their leases or remortgaging.
Last week, the Competition and Markets Authority, the UK’s competition watchdog, launched an investigation into the potential mis-selling of leases by developers and freeholders.
Housebuilder blames Help To Buy for market weakness
The government’s Help to Buy scheme has fuelled the recent weakness in the UK’s housing market, according to the chief of one of the country’s largest housebuilders. The scheme’s introduction in 2013 “brought forward price growth significantly”, said Pete Redfern, chief executive of Taylor Wimpey.
LKP and the All Party Parliamentary Group under Sir Peter Bottomley successfully managed to bring the issue to public prominence in October 2016.
In January 2017, Taylor Wimpey set aside £130m to convert doubling ground rent terms to better terms.
Just £25.5m of that had been paid out by the end of last year, according to figures seen by the FT.
This is an increase on the £11.5m that LKP identified as having been dispensed by July 2018.
In his interview with the FT, Mr Redfern also said that Help To Buy has contributed to a cooling of property prices.
“If you make it easier for people to buy something, you have an impact on pricing, unless that thing is unconstrained, which is clearly not true of housing,” said Mr Redfern.
Despite the policy being linked to strong pre-tax profits for Taylor Wimpey, Mr Redfern claimed that he was “by no means an unadulterated fan” of Help To Buy.
The state-backed housing scheme that came into effect in 2013 gives homebuyers the ability to move onto the housing ladder with cash deposits of just 5 per cent of a new-build property’s value. This is facilitated by the government offer of an equity loan of 20 per cent or 40 per cent in London, which comes interest-free for the first five years.
Since the introduction of Help To Buy, almost £12bn has been lent to buyers and 210,964 properties have been purchased through it, according to official figures. From 2021, it will only be available to first-time buyers, and will be phased out completely in 2023.
Critics say Help To Buy has been poorly targeted and was a major driver in controversies surrounding poor build quality, the spread of unfair leasehold contracts, and the mushrooming of boardroom pay of the big developers.
From 2021, the long-awaited ban on leasehold houses will also be applied to the flagship housing initiative.
Thanks to LKP’s exasperated intervention, commonhold properties will also be available to purchase with Help To Buy.
LKP has also backed calls to require new-build apartments to be sold as commonhold or share of freehold under Help To Buy 2021. The proposed reform could complement government’s stated ambition to “reinvigorate” commonhold tenure, which seems to be part of a wider effort to move away from vulnerable leasehold tenancies.
Tory maverick MP Crispin Blunt is urged to back Help To Buy ONLY on commonhold
Related posts:
Pete Redfern: Stop pontificating about the housing crisis and sort out the ground rent scandal of Taylor Wimpey’s own making
Pete Redfern tells LKP how Taylor Wimpey will sort the ground rent scandal
Taylor Wimpey rejects responsibility to resale buyers facing doubling ground rents
Dear Pete Redfern (again) … Opaque leases, dubious ‘independent’ legal advice, no contact from Taylor Wimpey during its ‘review’, normal industry practice to stuff clients with leasehold houses (especially in North West)
CMA forces Taylor Wimpey to sort out rip-off ten-year doubling ground rents
Have young buyers woken up to the great leasehold hoax? Looks like it …
It’s taken Pete Redfern nearly three years to admit Taylor Wimpey made a mistake.
In December 2016 I sent TW ( Angela Knight and James Jordan Directors) several e.mails informing them that the ground rent scandal would eventually become a massive issue much to the detriment of their company.
I even advised them of the action they needed to take to resolve their mistake, and put themselves ahead of the competition..
Their lack of concern has resulted in their reputation being destroyed and a distressing situation for thousands of families. They just don’t seem to care, and this Government is scared to take action.
Well done Michael, you are one of a slither of us who care.! I know it appears that most of the posts on here go unanswered but they don’t go unread in my comunity! All the residents dont agree with LKP but I do very, very strongly!!!!! I know the posts aren’t read by many but I love you, I truly do, please keep it up x x x
Too bloody right!! But clearly not repentant enough to want to put it right instead of this half baked “offer” to covert to RPI with settlement agreement. It makes me so mad. Buy back the freeholds and offer them to us for what you originally promised Mr Redfern. That’s the right thing to do and you know it.
They`ll have to buy them back at 25x ground rents….that`ll teach them an expensive lesson, very much like what they foisted on their customers.
Since many knew they were leasehold and told they could buy them after 2 years it seems the customers should get the chance to buy them at the nominal value as stated at the time of sale. Its only fair.
If you’re not told of a pre arranged fundamental contractual change at the point of sale, then that is miss-selling.
Mr Redfern
Normally when a CEO of a company admits to getting something as catastrophically wrong as the “onerous ground rents” that “error” is reflected in their bonus?
If Pete Redferns bonuses plus all the other guilty Directors bonuses were added to the £130million they set aside, maybe there is enough to by back all the freeholds,
Peter Redfern adopted blame attitude of doubling ground rent is horrendous abd he had no problem reaping the rewards. Yo go on state athat he is NOT a fan of help2buy is a joke…new homes companies have to APPLY for help2buy on their differing new homes sites!!