LKP and Chair of the Leasehold and Commonhold reform APPG Sir Peter Bottomley MP has met with Taylor Wimpey for a progress report on their ground rent “assistance” scheme. This is a scheme to help leaseholders who had purchased doubling ground rent houses and flats from Taylor Wimpey. The effected properties were built by Taylor Wimpey in the period 2007-2011.
The meeting was attended by Pete Redfern CEO of Taylor Wimpey and UK Planning Director Jennie Daly.
Leaseholders wanting to check or sign up to the Taylor Wimpey assistance scheme can visit the TW site HERE
Although the Taylor Wimpey web site answers a number of questions we asked for clarification on various points:
- TW have confirmed those who sign up to the assistance scheme will be able to change their mind at any time before they accept the final terms. Until that final contract is signed the leaseholder can decide they would prefer to take alternative action against their solicitor, the developer or the current freeholder.
- TW will require a compromise (confidentiality) agreements from those who wish to accept the final offer although certain information will obviously be openly recorded at the land registry.
- TW have confirmed they will not seek to impose terms in the compromise agreement that would limit leaseholders from taking action against conveyancing solicitors provided they do not recover on the same matter twice. (so an action against the solicitor for providing the wrong information will still be allowed)
- TW have confirmed that where they still own the freehold they will include second hand purchasers in the scheme although will require them to pay their own legal fees.
- The deals currently under negotiation with the freeholders will need to vary from freeholder to freeholder so the specific terms offered to the leaseholders will vary from site to site reflective of the agreement reached with the freeholder.
- TW confirm that the freeholders are constructively co-operating with them and that they hope to have made progress by the end of the year.
- TW confirm their focus is on negotiating with the freeholders is for deeds of variation.
- TW confirm they have been in correspondence with all leaseholders who have contacted them and advertised the scheme in the press.
The TW statements raise a number of important points.
Those leaseholders who have not signed up to the scheme should do so as they face no risk of losing their rights in taking alternative action. TW are not going to limit leaseholders from withdrawing from the scheme at any point before the finally sign to accept the negotiated terms. It the leaseholder does not want to accept their final terms they will still be able to take action against any relevant party including the developer.
Becasue there are a number of different freeholders the time frame in which agreement can be reached will vary as may the terms required to provide the leaseholders with a comparable level of “assistance”
Any agreement should not limit the leaseholders ability to enter into a separate negotiation to buy the freehold after varying the lease but of course leaseholders should have a solicitor check any contract before the sign.
Although Taylor Wimpey has replied to those leaseholders who have contacted them not all leaseholders impacted by the doubling ground rents may be aware of the scheme.
LKP welcomes the fact that Taylor Wimpey has been the first and so far the only developer to offer some financial “assistance” to their doubling ground rent buyers. If others do not follow then it seems inevitable government will have to act since a growing number of lenders have decided these doubling terms impact the future value of these homes and will no longer lend.
A number of concerns remain outstanding
- With the TW scheme there is still little chance of leasehold house owners being able to buy their freehold at the price they may originally have be told about during the purchase process.
- There is still a major problem for second hand buyers excluded from the scheme.
- It is not clear what will happen to those who have not become aware of the scheme.
- A number of leaseholders will feel they need to consider taking action against their conveyancing solicitor in addition to, or as an alternative to, the TW assistance scheme.
It now seems almost inevitable government or the sector will move to stopping the building of leasehold houses (as Taylor Wimpey has already committed to do). It is understood that it is not just the developers who have played this game for too long. There are perhaps more than one or two local authorities and land buyers who have decided to lease their freehold land for extra profit.
If government thinks the problem ends with Taylor Wimpey they would be wrong. There are other developers who used doubling ground rent terms. The worst seek to double the rent throughout the perpetuity of the lease making these properties effectively valueless according to some experts. RPI leases on leasehold houses and flats may be better than doubling leases but they also have issues.