On 22nd December 2021 Taylor Wimpey entered into an undertaking with the Competition and Markets Authority in relation to doubling ground rents for leasehold flats and houses. The undertaking is a direct result of The Housing, Communities and Local Government Committee inquiry reported on previously.
The problem:
Where ground rents for leasehold properties are not fixed but are variable they may be:
(a) doubled every 10 years or so; or
(b) increased in line with inflation or another mechanism
If so, this can lead to a dramatic and unexpected increases in the level of ground rent payable during the lease term..
Clearly, this could lead to ground rent becoming unaffordable for the Tenant in the future. However, the problems do not stop there because mortgage lenders regard such ground rent review mechanisms to be toxic and any homes which are subject to these lease provision may also now be unmortgageable.
The solution:
To address these concerns Taylor Wimpey’s have agreed to cap at the amount payable when the lease was created. ground rent on leases created within housing developments built by them. To that end Taylor Wimpey have via their agent, Estates and Management, begun writing to individual property owners to outline their offer and set out next steps for those leaseholders to address the problems with their leases. In many cases they have agreed to make a contribution towards the legal costs associated with the variation. There will be significant benefits for any leaseholder who decides to vary their lease because:
- the property will become more marketable; and
- there will be less likelihood of experiencing problems when the property is sold or remortgaged; and.
- the ground rent will usually be reduced, thus creating a year on year costs saving.
For these reasons if you are eligible it is sensible to vary your lease now, even if you have previously taken advantage of the offer to link your lease rent increases to the Retail Prices Index (RPI)
Nalders are able to guide you through the process of varying your lease. Please get in touch with Nalders Solicitors today for legal advice from experts.