Taylor Wimpey leaseholders no longer subject to doubling ground rents

The CMA’s probe into the historical sale of leasehold properties with doubling ground rent clauses by builder Taylor Wimpey is closed (PA Archive)

Leaseholders with Taylor Wimpey will no longer be subject to ground rents that double every 10 years, the UK competition watchdog has said.

The Competition and Markets Authority, which has been looking into leasehold practices across the housebuilding sector, said the FTSE 100 builder has voluntarily given formal commitments to remove terms from leasehold contracts that cause ground rents to double in price.

A ground rent involves a leasehold owner of a property paying an annual fee to a freeholder. Often housebuilders sell on freeholds to third parties.

Certain ground rent clauses can make some homes unsellable as lenders will in cases not offer mortgages against them.

Taylor Wimpey will also remove terms which had originally been ground rent doubling clauses but were converted so that the ground rent increased in line with the Retail Prices Index.

The CMA considered the original doubling clauses were “unfair terms and should therefore have been fully removed, not replaced with another term that increases the ground rent”.

Affected Taylor Wimpey leaseholders will now see their ground rents remain at the original amount from when the property was first sold. They will not increase over time.

In cases where the company has sold the freehold and cannot remove clauses directly, it will help get them removed at no cost to leaseholders.

Taylor Wimpey, which is led by Pete Redfern, said the probe into the historical sale of these sites is now closed following the latest voluntary undertakings.

The builder took the decision to stop selling leases containing 10-year doubling ground rent clauses on new developments from 2012. In 2017 it set aside £130 million towards helping convert customers’ leases into those that were “materially less expensive”

Today Taylor Wimpey said the cost of the latest undertakings falls within the original provision it made in 2017.

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.”