Housebuilder Taylor Wimpey has earmarked £130 million as part of plans to help customers caught out by property contract clauses that mean they're on the hook to pay escalating ground rents.
The issue affects leaseholders who were forced to stomach ground rents that doubled every 10 years; meanwhile the freeholds to their houses were able to be sold off to third-party private firms. This can make homes difficult to sell in later years if the identity of the freeholder is unclear.
With a leasehold, you effectively only buy the right to live in a property for the length of your lease agreement with the freeholder. When the lease ends, ownership returns to the freeholder unless you can extend the lease or buy the freehold. (By comparison, freeholders own the property and land itself.)
Now, following a review of Taylor Wimpey lease agreements struck over the past decade, the company has set aside the cash and issued an apology for the "unintended financial consequence and concern" for what MPs dubbed the "PPI of the housebuilding industry".
Check out our Buy Your Freehold guide if you've bought a leasehold property and are interested in potentially buying the freehold.
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'Doubling rent review clauses causing customers understandable concern'
A Taylor Wimpey statement read: "This lease structure was introduced by†Taylor Wimpey†in good faith in 2007. It is clear from our review that the impact of these doubling rent review clauses is now causing some of our customers understandable concern.
"We acknowledge that the introduction of these doubling clauses was not consistent with our high standards of customer service and we are sorry for the unintended financial consequence and concern that they are causing."
Taylor Wimpey in negotiations with freehold owners over reviewing ground rent terms
Taylor Wimpey said it has entered into negotiations with the owners of the freeholds who hold the power to double ground rent in order to alter the terms of the lease to "materially less expensive ground rent review terms".
The group said it will bear the financial cost of doing so and, in the event that it is not able to reach agreement with freeholders,†Taylor Wimpey†will continue to pursue "other avenues" to help customers.
The move follows a House of Commons debate on leasehold reform last year, when MPs called the situation "nothing short of a national scandal".
Additional reporting by the Press Association.