Taylor Wimpey has set aside around £130m to alter contracts with freeholders following revelations that the house builder included ten-year doubling ground rents clauses in leases on some properties between 2007 and 2011.
The company has been undertaking a review of the leases and yesterday announced that despite the doubling clauses being considered “entirely legal”, they were now causing “understandable concern”.
All of the freeholds have been sold to third parties but Taylor Wimpey announced it is in negotiations with the freeholders to alter the terms of the doubling lease to “materially less” expensive ground rent review terms.
The firm said it was bearing the financial cost of the changes, thought to be around £130m.
The move marks a victory for campaigners at the Leasehold Knowledge Partnership (LKP) and for MPs on the All Party Parliamentary Group.
Sebastian O’Kelly, of the LKP, said: “It is very likely that that generation of Taylor Wimpey management also knew that these lease terms would come back to haunt the company. Presumably after they had picked up undeserved bonuses and left.
“Home buyers 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.
“£130m is not small change. It is a start in resolving this issue. But await the details.”
Sir Peter Bottomley, co-chair of the All Party Parliamentary Group, who this week tabled a parliamentary motion calling for leasehold reform, said: “Taylor Wimpey has recognised that leaseholders have been disadvantaged by at least £130m.
“What is needed now is for all other developers to recognise their responsibilities.”