You may have heard in the news over the last 12 months that developers are getting into hot water over unreasonable ground rent clauses. If you own a leasehold property, you are liable to pay the freeholder an annual sum. This is usually a fixed nominal fee of £50-200 per year, but some developers (most notably Taylor Wimpey) have been adding clauses into the lease which causes the ground rent to double every 10 years.
Doubling ground rent
Under a doubling ground rent clause, within 100 years an annual ground rent of £250 becomes £256,000. Clearly over time your annual bill could become unmanageable, however the more pressing issue is that many mortgage companies are refusing to lend on a property with doubling ground rent, leaving the property almost unsaleable.
Ground Rent Review Assistance Scheme
Taylor Wimpey has now introduced a “Ground Rent Review Assistance Scheme”. If you purchased a leasehold property with doubling ground rent directly from Taylor Wimpey, this scheme will allow you to vary the terms of the lease bring it in line with 10 year RPI (Retail Price Index) rent reviews, which is far more acceptable to lenders and therefore buyers.
Taylor Wimpey will pay our fee of £750, leaving you with no additional costs to cover.
Eligibility of the scheme
- It applies to flats and houses where the ground rent doubles every 10 years
- It applies if you bought directly from Taylor Wimpey and still own your property (but in some cases it also applies to second owners).
- It does not apply if you own the property as a Company or other corporate entity.
If you did not buy directly from Taylor Wimpey you do not automatically qualify for the scheme. However, it is still worth completing the application form or e-mailing your freeholder, as in some cases they will agree to vary the lease to an RPI basis. In these cases you will be liable to personally cover our £750 fixed fee.
The small print
We urge all applicants to first read all of the information on the Taylor Wimpey website, as taking up the scheme waives your rights for compensation.
We cannot advise whether the scheme is the right thing for you to do, but if you have decided to go ahead, get in touch with the Swindon branch of our residential property department today on 01793 522688 or pop into our office in Old Town, Swindon.