Taylor Wimpey has set aside £130m and apologised to customers that were sold homes with rapidly rising ground rents
The housebuilder had been under pressure after customers complained that ground rents in Taylor Wimpey housing developments doubled every 10 years until the 50th year, in a leasehold structure it used between 2007 and 2011.
It said in a trading update it is entering into negotiations with the parties it sold the ground rents to, to alter the leases, making them less expensive, and it would bear the cost of this. It did not say what it would do for those who have bought the homes second hand.
Taylor Wimpey said: “The doubling clauses are considered to be entirely legal and are clearly set out in the relevant lease documentation. In addition, when buying their Taylor Wimpey property, all customers received independent legal advice as part of the standard conveyancing process.”
However, it acknowledged the doubling clauses were not consistent with its “high standards of customer service,” and it was “sorry” for the concern caused.
The difficulty in amending the ground rent structures is that they have been sold onto third parties, a common practice for housebuilders who group the leases together and sell them to investors looking for long term income streams.
It also said: “As a consequence of this decision, the group will make a gross provision of c.£130 million that will be recorded as an exceptional item in the 2017 first half accounts, which will have an impact of c.3% of net assets. We expect that the total cash outflow will be spread over a number of years.”
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