Did you buy a new build house under a long lease from a developer which provides for significant increases to the ground rent you pay over time under your lease?
Thousands of purchasers across the country did.
The rent review provisions contained in Taylor Wimpey leases, which allow for the ground rent to double every ten years, are now capable of being removed thanks to an investigation by the Government’s competition regulator.
It means these homeowners can now take steps to change the increases to their ground rent that would otherwise have taken effect during their ownership, so that no more than the original amount of ground rent due under their lease when they initially bought their property will be charged.
Eleanor Storey, solicitor in Wake Smith’s property team looks at the issue after being instructed by several leaseholders who bought a new build with Taylor Wimpey.
“Leaseholders who purchased a new build property with Taylor Wimpey have been in contact with us.
“The background to this is Taylor Wimpey were subject to a Competition and Markets Authority (CMA) investigation last year, due to concerning provisions contained in the new leases to the buyers of the new build properties, whereby the ground rent would double every 10 years.
“As a result of the review and concerns, Taylor Wimpey has introduced a ground rent review assistance scheme.
“This means that affected Taylor Wimpey leaseholders can enter into a legal agreement known as a Deed of Variation which will see their ground rents fixed at the original amount - that is, when the property was first sold to them - and the ground rent will not double during their ownership as specified in the lease.”
Campaigners described the CAM’s decision as a "massive win" after people had struggled to sell or obtain a mortgage on their home, due to these increases.
The developer also confirmed to the CMA that it has stopped selling leasehold properties with doubling ground rent clauses.
What is a leasehold?
With leasehold property, the leaseholder/ buyer owns a lease which gives them the right to use the property for a number of years, but they may still have to get their landlord's permission for any work or changes to their homes. The lease acts as a contract between the leaseholder and the landlord and sets out various rights and responsibilities of both parties.
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 during the course of the lease term should an agreement be made with the Landlord, and certain qualifying conditions are met.
However, leasehold house owners are often charged expensive ground rent as well as fees if they want to make changes to their homes, which can make a leasehold house difficult to sell.
Other housing developers actions
The CMA launched enforcement action against four housing developers in September 2020.
Countryside and Taylor Wimpey were highlighted for using "possibly unfair contract terms", and Barratt Developments and Persimmon Homes contacted over the possible mis-selling of leasehold homes.
Countryside and Persimmon have already agreed to make changes. The CMA's investigation into Barratt Developments continues.
What do you need to do?
If you bought a new build property from Taylor Wimpey and still own a home (houses or apartments under a lease containing a doubling ground rent clause, please contact us.
Qualifying leaseholders are required to instruct solicitors to act and advise them with regards to making these changes to their leases via a legal document called a deed of variation.
A deed of variation is used when amending or varying an existing contract, such as a lease, that has been entered into as a deed. It records the changes that have been agreed by all parties, and is then registered at the Land Registry.
The completed deed will vary the ground rent review clause contained in the lease, and Taylor Wimpey Leaseholders are also offered £750 from the freeholder under the ground rent review assistance scheme towards their legal costs.
For further information about completing a deed of variation contact Eleanor Storey at Wake Smith Solicitors on 0114 266 6660 or email [email protected]
