Taylor Wimpey - Ground Rent set to double

Dakotasdream

Hello everyone, I am new here so please bear with me. I live in a 1 bed coach house that is mortgaged. I currently pay £300 a year ground rent. I have now received a letter from Taylor Wimpey reminding me of the Taylor Wimpey Ground Rent Review Assistance Scheme (whatever that is!). The ground rent has a 10 year review which can double the cost of the ground rent. The letter states the scheme has been introduced because TW would like to help its customers and other eligible owners convert their existing leases to one which incorporates materially less expensive ground rent review terms, which increase in line with the Retail price Index. The conversion will be done by Deed of Variation. Having looked at the paperwork they have sent, there is now a new freeholder responsible for the collection of ground rents, and no longer Taylor Wimpey. I am totally confused by what this all means?, but then have also seen that the Government are likely to abolish ground rents? Can anyone please help me to understand this? I do not want to sign up for something that could potentially harm what I already have in place! Thank you in advance.

AdrianC

Trying to decipher what you've said, you already have a 10yr doubling ground rent clause in your lease. Working from that assumption...

TW know that's pretty much viewed as toxic and unmortgageable in the current climate, so have a "scheme" in place to try to come to an agreement over a less-toxic revision to your lease.

Sounds like this review will also include the freehold changing ownership. No great surprise - that can happen at any time.
You could buy it... Or you could go through a statutory extension, adding 90yrs and bringing the ground rent down to peppercorn.

There isn't really a downside for you - your property is currently pretty much unsaleable. The question is over how much upside there is...

The scheme - https://www.taylorwimpey.co.uk/leaseholdfaq
Of course, there's a lot of other people in the same boat as you, so a shedload of solicitors advertising for your business. You may or may not have your own opinion on how likely they are to chase ambulances.

MaryNB

You should get a solicitor (absolutely not one recommended by TW) to advise you. 

You will struggle to sell your flat with a ground rent that doubles every 10 years. Most lenders won't touch it so you'd probably be stuck selling to a cash buyer at a big discount. It sounds like they are proposing to amend the ground rent increase clause to one linked to RPI which is significantly preferable to what you have now. Get a solicitor to fully review every aspect of the Deed of Variation. Make sure you there is nothing sneaky in there. 

Dakotasdream

Thank you for your replies which are really appreciated. Can I ask, with the 'pending' new announcement that the government 'might' look at changing legislation in respect of ground rents, would I then benefit from the changes and not have to pay ground rent at all ? 

AdrianC

Dakotasdream said:

Can I ask, with the 'pending' new announcement that the government 'might' look at changing legislation in respect of ground rents, would I then benefit from the changes and not have to pay ground rent at all ? 

Nobody knows.

All the government have said so far is that they might perhaps think about getting round to doing something.
They haven't laid draft legislation.
That draft would have to go through both houses of parliament, gaining amendments on the way.
Then it gets passed into law, effective at some future date.

At any one of those stages, they might simply decide to let it die a death... Or the responsible ministers may change. Or we might hit the May 2024 due date for the next election. Or MPs may vote for an earlier election. Or the Conservative party may decide to change leader, and thereby PM. Or, or, or.

eddddy

Dakotasdream said:

Thank you for your replies which are really appreciated. Can I ask, with the 'pending' new announcement that the government 'might' look at changing legislation in respect of ground rents, would I then benefit from the changes and not have to pay ground rent at all ? 

It's very unlikely that existing ground rents will disappear for free.  More likely, it will be easier and cheaper for you to pay the freeholder a lump-sum to get it reduced to zero.

If you accept the TW offer, the lump-sum you'd have to pay should be lower. (But get a solicitor to check the terms of the lease variation to make sure.)

MaryNB

The government is looking at allowing leaseholders to extend their lease by 990 years instead of 90 years (the current extension via the statutory route). They are also looking at reducing the costs associated with increasing the lease. Extending the lease via the statutory route should bring your ground rent to zero. There is a proposal to bring ground rents on future leaseholds to zero, not existing leases (unless they are extended).

The question is do you have the funds to extend your lease? The costs that will be incurred under the new proposals are yet unknown but should be much cheaper than the current system. How long have you left on your lease? Are you planning to sell in the foreseeable future.

By what I've read (and I am absolutely not an expert in any way, shape or form), the new rules won't impact on your lease unless you move to extend it. 

Government reforms make it easier and cheaper for leaseholders to buy  their homes 

Dakotasdream

AdrianC said:

Dakotasdream said:

Can I ask, with the 'pending' new announcement that the government 'might' look at changing legislation in respect of ground rents, would I then benefit from the changes and not have to pay ground rent at all ? 

Nobody knows.

All the government have said so far is that they might perhaps think about getting round to doing something.
They haven't laid draft legislation.
That draft would have to go through both houses of parliament, gaining amendments on the way.
Then it gets passed into law, effective at some future date.

At any one of those stages, they might simply decide to let it die a death... Or the responsible ministers may change. Or we might hit the May 2024 due date for the next election. Or MPs may vote for an earlier election. Or the Conservative party may decide to change leader, and thereby PM. Or, or, or.

Fair comment, sorry I have another question! ... how would I go about increasing to a statutory extension of 90 years to induce the peppercorn rent? 

AdrianC

https://www.lease-advice.org/advice-guide/lease-extension-getting-started/

NameUnavailable

See what TW offer you BUT you still have a ground rent over £250 which, if you are outside London, is still going to be a problem for some as it means you are in an assured shorthold tenancy.

You may be better off going for a statutory lease extension which will reduce the ground rent to zero although the up front cost is likely to be higher than anything TW offer you under their scheme.

Dakotasdream

Thank you for all your replies, they are very helpful. Call me a cynic but I don't really trust anything that TW say will help me! The service charge has doubled to over £1,000 a year, now the ground rent is set to double, just had another invoice for £200 for greenbelt 'stuff' (again whatever that is). None of this was picked up by my solicitor when I purchased the property 4 years ago. I do not plan on selling my home, but need to stop their ever increasing fees from spiralling out of control.