Taylor Wimpey leasehold property owners urged to amend lease to cap ground rent
Owners of Taylor Wimpey leasehold properties will get up to £750 of their legal fees paid to ensure they no longer have to face doubling ground rents following the closure of the investigation by the Competition and Markets Authority (CMA).
Mason Thomas Law, a specialist in new build properties, is urging people who have purchased affected Taylor Wimpey leasehold properties, to access the property developer’s Ground Rent Review Assistance Scheme and use it to amend the lease to their property and cap the ground rent for minimal cost to them.
“Taking advantage of the lease cap introduced by Taylor Wimpey by formally varying your lease, is strongly recommended to ensure future mortgageability and saleability of your property,” advised Jo Malcolm, Director of Mason Thomas Law.
£130 million has been set aside by Taylor Wimpey to cover the extensive legal costs and compensation payments associated with the reform of ground rents which are expected to come into force later this year.
The reform of the leasehold system follows an investigation by the Competition and Markets Authority (CMA) into four housebuilders.
The current system of long leases with ground rents was introduced in the 1920s. Under the Taylor Wimpey leasehold agreements which contain doubling rent clauses, the owner of a property built in the 1960s and which was purchased with an initial annual ground rent of £150 would now be paying £4,800 annually rising to more than £600,000 at the end of the 125-year lease.
The escalating ground rent charges mean that many people in the UK have been left in a position where they are stuck with homes they cannot sell or been faced with unexpectedly high prices to buy their freehold. Until now.
According to official government figures there were an estimated 4.6 million leasehold dwellings in England between 2019 and 2020, which equated to 19% of the English housing stock. More than two-thirds (3.2 million) of the leasehold dwellings were flats and 1.5 million were houses.
While London has the highest rate of leasehold properties (34.5%), 13.3% of housing stock in Yorkshire and Humberside and 8.9% in the East Midlands are leasehold properties.
Taylor Wimpey, which has been building residential properties since the 1920s. has a long history with its roots going back to Taylor Woodrow and George Wimpey which merged in 2008.
Taylor Wimpey was just one of four housing developers investigated by the Competition and Markets Authority (CMA) in 2020 into the historical sale of leasehold properties with doubling ground rent clauses.
Following the investigation, Persimmon Homes will now allow its leaseholders to buy the freehold of their property at a discounted rate, capped at £2,000, Countryside Properties will remove doubling ground rent terms from leasehold agreements and Barratt Homes has introduced 999-year leases and zero ground rent.
What is a leasehold?
With a leasehold, the person owns a lease which gives them the right to use the property, but they still have to get their landlord’s permission for any work or changes to their homes.
When a leasehold flat or house is first sold, a lease is granted for a fixed period of time, typically between 99 and 125 years, but sometimes up to 999 years – although people may extend their lease or buy the freehold.
Following the CMA investigations, parliament has taken a closer look at the leasehold situation in England and Wales and the Leasehold Reform (Ground Rent) Act is expected to come into force in August, after it received Royal Assent on 8 February 2022 – although some believe it will happen sooner. One of the key issues to be addressed by this Act is the prevention of unfair escalating ground rent provisions which have been commonplace in years gone by.
Accessing the Taylor Wimpey Ground Rent Review Assistance Scheme
If you own a Taylor Wimpey leasehold property and would like help to access the Ground Rent Review Assistance Scheme to amend your property lease by way of variation, contact the Mason Thomas Law team on 0114 294 5360.