Housebuilder Taylor Wimpey (LON:TW) is to set aside £130 million to pay out buyers of its new-build leasehold properties, left almost worthless after trapped in spiralling ground rent contracts.
Described by MPs as a “national scandal” and the “PPI of the house building industry”, a Guardian investigation last year uncovered how buyers of Taylor Wimpey homes found them to be almost unsaleable due doubling ground rents.
“This lease structure was introduced by Taylor Wimpey in good faith in 2007.” said Taylor Wimpey in a statement.
“It is clear from our review that the impact of these doubling rent review clauses is now causing some of our customers’ understandable concern.
“We acknowledge that the introduction of these doubling clauses was not consistent with our high standards of customer service and we are sorry for the unintended financial consequence and concern that they are causing.”
The group said it would set aside £130 million “to alter the terms of the doubling lease to materially less expensive ground rent review terms, with the group bearing the financial cost of doing so”.
Sebastian O’Kelly, of the Leasehold Knowledge Partnership, said: “Homebuyers wanted homes and trusted a plc housebuilder. Taylor Wimpey created an investment asset class – the freehold – which it then traded to anonymous and murky investors, who hide their beneficial ownership behind nominee directors.
“This ground rent racket is wealth erosion on a massive scale, which has fallen mainly on young first-time buyers and their families. It has revealed the rotten core of leasehold as a form of property tenure.”
Graham Balchin, a solicitor who has worked on behalf of many home buyers affected by the escalating ground rents, said: “There can be no doubt that the Guardian’s series of articles has played a big part in generating the publicity which has, in turn, resulted in this change.
“While this development will come as an enormous relief for those leaseholders who bought new from Taylor Wimpey, many of these properties have changed hands since they were first sold and its statement indicates that it is only those who bought direct from Taylor Wimpey that will be helped.
“If that is a correct understanding of TW’s position it will mean that there will still be thousands of TW leaseholders who will not be helped. That class of owner could, therefore, remain stuck with onerous ground rents in properties which will remain difficult, if not impossible to sell, at least for a price close to the value of a similar property without the onerous doubling clause.”