One of the UK’s largest housebuilders has apologised to thousands of its customers for putting in place spiralling leasehold deals which have been described by MPs as “a national scandal.”
Some homeowners were sold properties which included leasehold contracts that doubled in price every 10 years. Taylor Wimpey has become the first major housebuilder to admit the price hikes were unfair and the company has set aside £130 million to help redress the situation.
It is hoped that other housebuilders will follow suit following widespread criticism of the schemes which MPs also dubbed “the PPI of the housebuilding industry.”
Leasehold reforms came under the parliamentary spotlight last year, with MPs concluding that thousands of home buyers were being “ripped off left, right and centre” and that it was “nothing short of a national scandal”.
In addition to the price hike, some leasehold agreements were criticised for allowing third-party firms to buy freeholds to properties, making it more difficult to sell the homes.
Taylor Wimpey has admitted that leasehold contracts, which contained the ‘doubling clause’, were issued to some customers between 2007 and 2011 and that the £130 million will be used to make ground rents for those home owners “materially less expensive”.
A company spokesperson said: “It is clear from our review that the impact of these doubling rent review clauses is now causing some of our customers understandable concern.”
The spokesperson added that Taylor Wimpey was “sorry for the unintended financial consequence and concern that they are causing”. It also confirmed that it is negotiating with a number of third party freehold owners in an attempt to change the contracts and has pledged that it will “pursue other avenues” to help homeowners.
Nicola Tubbs, an Associate Executive and conveyancing expert with Palmers said: “Instances of housebuilders selling on the freehold to a third party who are then free to ramp up ground rent fees is sadly neither uncommon nor illegal.
“House-buying is one of the most stressful purchases people make so the last thing you need is the additional headache of finding out that your freehold is going to cost far more than you originally expected.
“As a leaseholder it is important to be aware that you are legally entitled to buy your freehold after two years and if you and the freehold owner cannot agree a price, a tribunal will decide how much you should pay.”
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