Taylor Wimpey leaseholders freed from doubling ground rent clauses – what it means for you – MoneySavingExpert

December 23, 2021 By admin

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Taylor Wimpey leaseholders freed from doubling ground rent clauses – what it means for you 
Homeowners with Taylor Wimpey leases will have costly clauses that see their ground rent double every 10 years removed following action from the competition watchdog. Affected leaseholders’ ground rents will now remain at the amount charged when they first bought their home. Doubling ground rent clauses will also be left out of any future Taylor Wimpey leases. 
The property firm has today (22 December) voluntarily agreed to remove these terms from both existing and new leaseholders’ contracts. No ground rents had actually doubled since Taylor Wimpey set-up these leases, so no refunds need to be made – though homeowners may have struggled to sell their home or remortgage due to these clauses. 
This doesn’t, however, apply to people with leases that were sold on by Taylor Wimpey to a new freeholder. In this instance, your only option is to contact your freeholder and ask if it will make the same changes as Taylor Wimpey. The CMA couldn’t say how many leases had been sold on by Taylor Wimpey.
The Competition and Markets Authority (CMA) first opened an investigation into several property firms, including Taylor Wimpey, in September 2020 after uncovering “troubling evidence” of potentially unfair terms and mis-selling. The CMA then wrote to Taylor Wimpey in March this year asking it to ban the use of doubling ground rent terms.
Around 4.5 million people in England currently own their home on a leasehold basis – typically flat owners and some new-build property owners. This means while you own the property, you don’t own the land it sits on. The land is instead owned by a freeholder, which can be an individual or a management company, and you typically have to pay rent to them on an annual basis (known as ‘ground rent’) for a set number of years. See our What is a leasehold? guide for more info on how they work.

At the same time the CMA opened an investigation into Taylor Wimpey, it also asked Countryside to remove its similar unfair ground rent charges. In September, the firm agreed to remove clauses from its leases that allow it to double ground rent every 10 to 15 years and to remove terms that were originally doubling clauses but were converted so that the ground rent increased in line with the Retail Prices Index (RPI) measure of inflation.
The CMA’s investigations into Barratt Developments and Persimmon Homes are both still ongoing. 
One way to try to get around increasing ground rent clauses is to take out what is known as a ‘statutory’ lease extension – which you can do if you have owned your property for at least two years. This extends the lease but also reduces the ground rent down to zero, which is sometimes referred to as a ‘peppercorn’ lease.
To do this though, you will have to pay the freeholder a premium, and you’ll also have to pay for the legal costs of extending the lease. How much this premium is will depend on several factors, including the cost of the property, so ensure you know the costs involved first.
Andrea Coscelli, chief executive of the CMA, said: “This is a huge step forward for leaseholders with Taylor Wimpey, who will no longer be subject to doubling ground rents. These are totally unwarranted obligations that lead to people being trapped in their homes, struggling to sell or obtain a mortgage. I hope the news they will no longer be bound into these terms will bring them some cheer as we head into Christmas.”

Michael Gove, secretary of state for levelling up, added: “Unfair practices, such as doubling ground rents, have no place in our housing market – which is why we asked the CMA to investigate and I welcome its success in holding these major industry players to account.
“This settlement will help to free thousands more leaseholders from unreasonable ground rent increases and other developers with similar arrangements in place should beware, we are coming after you.”
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