Pete Redfern (left), the CEO of Taylor Wimpey has just sent the following email (below) to LKP.
Taylor Wimpey proposes to vary the leases to “convert existing doubling leases to an alternative lease structure, specifically incorporating materially less expensive ground rent review terms”.
LKP urges caution on the part of leaseholders to accept any deal involving turning the ground rents into those linked to RPI.
A number of freeholders have already made an offer to vary the leases to RPI.
What Taylor Wimpey needs to understand – and the murky, anonymous investors who bought these freeholds hiding their beneficial ownership behind nominee directors – is that the ground rent game is exploded.
Taylor Wimpey needs to offer the freeholds to its cheated customers.
This means settling up with the investors who bought them, but that is Taylor Wimpey’s problem.
The whole grisly process of these sales was spelled out by solicitor Mari Knowles to MPs at the All Party Parliamentary Group on leasehold reform last week.
If Taylor Wimpey thinks it is dealing with uninformed and unadvised former customers who can be fobbed off with slightly less predatory ground rent terms, it is going to be rudely disabused.
Dear Mr Boyd and Mr O’Kelly
We wanted to send you an email with the details of the announcement we have made today and which we are currently communicating to our customers.
As you know, Taylor Wimpey announced in November that we would undertake a thorough review of leasehold structures including those with a ten year doubling ground rent clause. Whilst we have always been clear that there is no legal obligation to act on this issue, we do take the concerns of our customers very seriously and therefore have undertaken a significant amount of work to investigate the issues that have been raised.
Today, we are able to confirm the details of a help scheme – Ground Rent Review Assistance Scheme – to be funded by Taylor Wimpey. The proposals below are based on discussions with the current freeholders, lenders and communication with the customers themselves and are aimed at addressing the concerns raised including regarding mortgageability and saleability.
The Proposal
The help scheme, funded by Taylor Wimpey, is to assist customers who purchased from us and still own homes which have a doubling lease. The scheme is being offered by Taylor Wimpey on a voluntary basis to qualifying customers, subject to necessary eligibility checks.
Based on the findings of our review, we believe that the best solution is for Taylor Wimpey to help customers convert existing doubling leases to an alternative lease structure, specifically incorporating materially less expensive ground rent review terms. This will be done via a legal document called a deed of variation. From our discussions with lenders, we are of the view that this proposed measure will also allay concerns around the saleability or mortgageability of our customers’ homes which have doubling leases.
In order to achieve this, as Taylor Wimpey no longer owns the freeholds to these properties, we are working with the organisations that own the freeholds to convert the doubling leases. At this stage, we have engaged with freeholders representing the majority of the properties with doubling leases and these discussions are proceeding well. This gives us a clear view of what we are hoping to achieve and how we would like to help qualifying customers.
Taylor Wimpey will cover the cost of converting the lease terms and will also make a fixed payment towards each customer’s legal costs incurred in relation to the deed of variation. While we believe that changing the lease provides the best answer, if for unforeseen reasons we cannot reach a reasonable solution with a particular freeholder, we will continue to pursue other avenues to help our customers.
While discussions are proceeding well with freeholders, we anticipate that the detail of the process will take some additional time to work through in full and we would appreciate your ongoing patience as we work hard to achieve this positive outcome. In the meantime, we intend to come back to customers again by Friday 23rd June with an update on each individual position. If we are able to come back to customers individually before then, we will of course do so.
We have also established a dedicated customer service centre to support and guide customers. This will include a new section of the Taylor Wimpey customer service website (for info it can be found here www.taylorwimpey.co.uk/leaseholdFAQ) which will include further details, including full qualifying criteria and guidance on how to start the process.
I hope you have found this information useful and it provides you with a thorough overview of how we intend to proceed for our customers. We would be happy to meet with you to discuss our approach. If this would be helpful, please let me know when you might be available and I will ask my office to arrange a convenient date.
While Taylor Wimpey is not legally obliged to take any action with regard to doubling leases, we do recognise that these leases have caused our customers concern. We want to help our customers and we are committed to helping to resolve this.
Your sincerely,
Pete
Related posts:
Taylor Wimpey CEO says doubling ground rent scandal under ‘review’. But Bottomley asks: ‘Have innocent homebuyers been shafted?’
Taylor Wimpey delays ground rent scandal ‘review’ to April, and hopes, like Mr Micawber, ‘something will turn up’
Pete Redfern: Stop pontificating about the housing crisis and sort out the ground rent scandal of Taylor Wimpey’s own making
Taylor Wimpey rejects responsibility to resale buyers facing doubling ground rents
Taylor Wimpey’s Pete Redfern tells FT ‘we got it wrong on ground rents’
Taylor Wimpey to pay £130 million to solve doubling ground rent scandal
If TW are genuinely offering £130million to solve this problem, that sum should be enough to enable EVERY leaseholder in a TW house to buy the freehold.
That should be the escape route for TW and the pressure will then move onto the other developers.
Messing about changing lease conditions will only cause more worry and aggregation which will rebound on the company. Initially that would cost them a lot less but in the long term much more with reputations never being restored.
MICHAEL EPSTEIN TELLS PETER REDFERN HOW TAYLOR WIMPEY SHOULD SORT OUT THE GROUND RENT SCANDAL!
No matter what the cost every house sold on leasehold must have the freeholds bought back and given to leaseholders free of charge. This must also apply to second generation owners of Taylor Wimpey homes as well. Any other option is not acceptable.
Taylor Wimpey Share Price Hits Record High….up 2% today!
I actually think they will make money from this…. WOW
Leaseholder, with respect it seems you are looking at the finger when it is pointing at the moon!!!! C’mon , be pro active and start a campaign for the rights of flat leaeholders- I’ll give you lots of support, Lack of time is not an excuse. The founder of the NLC is a NHS nurse…..
If the Taylor Wimpey doubling ground rent scandal affecting leasehold houses is “Not consistent with our high standards of customer service and we are sorry for the unintended financial consequence and concern this is causing” What then of Taylor Wimpey built flats with doubling ground rent clauses in the lease? Is that also “Not consistent with our high standards of customer service?”
If TW are genuinely willing to spend £130million on solving this issue it should be enough to fully compensate all TW leaseholders, Doublers, RPI’s, Resales and Flat dwellers.
I think the leaseholders would still be asked to pay the original sort of sum for the freehold (under £5000).
I think if the above conditions were met then the vast majority of TW leaseholders would be satisfied.
It would be interesting to hear their views.
Michael
Based on their annual reports for 2007-2011, TW completed on 58,584 homes. I have searched and cannot find details of how many of these properties were sold with doubling ground rents, but if only 50% were sold as such (and I can imagine it’s a lot more) and if 75% of these are still owned by the original buyer (a condition of the proposal), then £130m equates to just £5,917 per home. I hardly see this as being enough to fully compensate all of these leaseholders, when most have been quoted £30k+ to purchase the lease now that TW have sold them on.
And this is before they consider RPI’s and Resales.
I fully agree with your point that leaseholders should still be asked to pay the original sort of sum for the freehold (c£5k), but £130m is nowhere near enough for TW to pay the balance.
I think it’s clear from the wording of the proposal “to help customers convert existing doubling leases to an alternative lease structure, specifically incorporating materially less expensive ground rent review terms” exactly means converting the doubling to an RPI linked clause. Whilst this is sure to be less onerous, it is yet to be seen whether it will “allay concerns around the saleability or mortgageability” of homes with theses leases.
Over the next 40 years (I have already lived in our house for 10 and seen the ground rent double to £500) the ground rent will escalate to £4,000pa or £75k in total. Linking this to RPI of approx 3.2%pa from now until 2056, I would still see a bill of nearly £40k over that time. Material… yes, but still significant.
[Note: I’m not sure if it will double again to £8k in 2057!]
I will certainly be exercising caution until I hear back from TW, as I cannot see how £6k per home will compensate the freeholder, when they stand to lose a lot more than that.
Applaud is possibly the wrong wrong word, but I do commend TW somewhat for this move. I only hope it is going to start the ball rolling.
Spot on as usual Mr Epstein. Answers on a postcard please. .
Perhaps, in retrospect, this will be seen as the moment it was recognised that leasehold tenure had to come to an end. Kudos to LKP for this result, which is, I’d like to think the end of the beginning. (Sadly I’m not optimistic that the Conservatives are even remotely serious about a “country that works for everyone”).
The abolition of leasehold is what’s needed, not a patch that leaves most of the abusers free to continue their monetising scams.
The UK needs class action law suits and punitive sanctions that actually result in jail time for some of the squalid predatory capitalism we have seen over and over again in leasehold. I will contribute to any collective fund that seeks to prosecute the individuals responsible for their anti-social behaviour. Directors have a legal duty to consider the social impact of their decisions under UK company law. It is illegal to outsource work to China without considering the environmental and social impact of such as decision. It’s entirely defensible if a competitor abroad is doing it and not doing so risks the viability of the company. But this is about houses, which are never going to be manufactured abroad. There is no mitigating circumstance. The motivation for creating this asset class was one thing, and one thing, only: unbridled greed.
If a foreign power imposed leasehold and the kinds of rip-offs, deceptions and conflicts of interest this site has done so much to document there would be an insurrection. “Pete”‘s lame response to the concerns he is anxious to tell us he has no legal obligation to address is an outrage. And it tells us clearly that the perpetrators think they can patch things up and get back to business as usual.
I don’t think that’s going to fly.
Paul, you are right. Corrupt leasehold needs abolition but there is no sign any of the political parties will commit in their manifestos. Sajid Javid has called the system feudal but no action. He knows about the thousands of lease disputes that get media coverage but does nothing.
Taylor Wimpey is slippery as an eel. Their resolution has narrow parameters and explicitly leaves out commitment to changing leasehold to freehold houses. TW says they acted bona fide in customers’ interests and didn’t think doubling ground rents would cause misery. Did Pete Redfern not do simple maths to work out 7% compound interest over x years =.. Yet more lies from TW , the other builders and third parties.
I wonder if TW will be transparent and pay for expert QCs to represent their ‘valued customers.’ In my personal experience over a new build quality problem it’s more likely they will settle with a few people, impose Tobin gagging clauses and disappoint the majority. Business as usual until feudal lease law is abolished & TW will continue selling uberhauses with doubling ground rents.
Well done to LKP for covering so many lease abuse stories. Peter Bottomley or Jim Fitzpatrick for Housing Minister would be good.
I bet PR still ends up with a nice hefty bonus at the end of the year, even after all this #leaseholdscandal !
Flat owners will not get sidelined in all this… we want change. Flat owners are the ones who are suffering the most in all this and there is an easy solution as the house crisis proves.. No more excuses from our legal profession, industry professionals, managing agents, freeholds etc etc.