No one likes to say "I told you so" but if you will indulge me this one time....
So let's recap. Taylor Wimpey was recently in the news for all the wrong reasons. Like most housebuilders, it had been selling on ground rents to finance houses capitalised at some x 10 revenues I believe.
A nice earner you say.
The problem however has has come to the attention of the press in that these pernicious clauses have been putting off future buyers.
Would you buy a house subject to a rent charge that doubles every five or ten years?
If you understand the power of compounding the answer is an emphatic no.
I wrote a post on 30th March which you can get here in which I basically said that Wimpey was facing a) PR nightmare made worse by social media and b) the serious danger of blighted housing estates which would get very political very quickly.
In other words, forget any legal arguments: Wimpey has to act and act now.
Ok I did not expect action a month later but that is what we have. Wimpey has apologized, set aside £130m and promises to negotiate on the owners' behalf to reach agreement with the said finance houses.
Other housebuilders should take note and developers out there needs to know about this and make sure your standard leases are checked carefully.
Taylor Wimpey has apologised to customers and set aside £130m to resolve disputes over homes that were sold on leases that stipulated their ground rents would double every 10 years.