Taylor Wimpey sets aside £130m to settle lease rows

Grant Prior 5 years ago
Share

Taylor Wimpey is setting aside £130m to compensate home buyers locked into unfair leasehold contracts.

The historic leases have prompted a storm of complaints after homeowners realised their ground rent charges could double every ten years.

The leases were attached to properties sold between 2007 and 2011 and have been attacked by MPs as the “PPI scandal of the property sector”.

In a trading update today Taylor Wimpey outlined its plans to deal with the problem.

It said: “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. 

“In line with normal practice the relevant freehold reversions have been sold by the Group to a number of third parties over a number of years.

“For those customers who acquired from, and remain the owner of a Taylor Wimpey leasehold property which is subject to this specific doubling clause, we have already entered into negotiations with the respective owners of the majority of the freeholds to alter the terms of the doubling lease to materially less expensive ground rent review terms, with the Group bearing the financial cost of doing so. 

“In the event that we are not able to reach agreement with individual freeholders, we will continue to pursue other avenues to help our customers.

“As a consequence of this decision, the Group will make a gross provision of c.£130 million that will be recorded as an exceptional item in the 2017 first half accounts.”

Chief Executive Peter Redfern added: “Our review of leases with ten year doubling ground rents is now complete and, following conversations with freeholders and lenders, we are today announcing measures which will address our customers concerns in an appropriate and fair manner. 

“Whilst there is a financial cost to the Group related to this course of action, we confirm that our dividend targets and land investment programme are not impacted.

Redfern also shrugged off any fears of a slowdown in sales in the run up to June’s General Election.

He said: “In previous election periods, we have seen a slowdown in the housing market as customers pause before making major financial decisions like buying a home. 

“We are optimistic that in 2017, assuming no major policy changes, the upcoming General Election will not disrupt this positive market sentiment.

Latest news

Green light for major overhaul of Surrey pharma campus

Kier and Mace in bidding revamp project with three storey glulam building at its heart
4 mins ago

Morgan Sindall hires Crossrail safety director

Carole Bardell-Wise joins infrastructure business as SHEQ Director.
3 mins ago

Subbies stop working for Beaumont Morgan Developments

Manchester based contractor was delivering Fortis Quay for associate development company
1 day ago

Roofer dies in six metre plunge through asbestos sheets

Court hears no safety nets were fitted on site
18 hours ago

Gove threatens ban on cladding suppliers failing to pay for retrofits

Cladding and insulation suppliers now in firing line for cash for £9bn post-Grenfell remediation bill
1 day ago

Bill for £22bn HS2 extension to Manchester goes to Parliament

52-mile extension of HS2 to Manchester via Manchester Airport will support 17,500 construction jobs
23 hours ago

Galliard scoops up trio of sites for schemes worth £265m

Sites in Redbridge, Ipswich and Milton Keynes to be developed
23 hours ago

Plans in for 350-flat Salford student scheme

Developer X1 hopes to start 15-storey building later this year
1 day ago

Green light for Birmingham Paradise landmark hotel

17-storey hotel will be the 'cornerstone' of Phase 2
4 days ago

Structural steel price jumps another £50 a tonne

British Steel blames New Year's price hike on continuing high product costs
4 days ago

Enabling works start at £400m Manchester First Street

Downing to start main construction in March of three resi buildings rising up to 45 storeys
4 days ago

Former BAM Nuttall chief to join Murphy

Adrian Savory to start new role as director of Major Projects division next month
4 days ago

Bouygues set for London Tustin Estate 700-home rebuild

Phased building programme to start towards the end of the year
4 days ago

Safety horror show on housing site leads to director ban

Court hears contractor ignored multiple prohibition and improvement notices
4 days ago

JV North calls up local firms for £250m new home works

Framework for home building projects worth up to £2m
4 days ago

Kier more than halves debts to below £200m

Kier chief reports steady progress in first six months of trading
5 days ago

Barhale boosts funds as it looks to rebuild turnover

Contractor confident as water companies ramp-up spending plans
5 days ago

HS2 labour agency looks to float on AIM

£23m turnover labour supply business looks to raise funds for expansion
5 days ago

Kane scores £29m M&E deal with Willmott Dixon

Off site works to play crucial role in major London estate contract
5 days ago

Graham secures third Audley retirement village

Work starts on Audley Villages site at Scarcroft, West Yorkshire.
5 days ago

Keltbray wins first deal for former nmcn infrastructure arm

Hull waste processing contract for rescued division
6 days ago

50 firms win £750m decarbonisation framework

Fusion21 framework to target 'whole building' works on homes and schools
6 days ago

Balfour Beatty UK construction MD to step down

Tom Edgcumbe to depart after just over a year as MD construction services in England and Wales
6 days ago

Crest Nicholson trebles cladding retrofit provisions to £43m

House builder revises building safety retrofit costs in face of new Government guidance
6 days ago

BAM bags £110m refurb of iconic Covent Garden tower

Landmark Seifert-designed 15-storey Space House to get two extra floors
7 days ago

Winvic to start UK’s largest speculative shed

Ellesmere Port warehouse understood to be worth around £80m
6 days ago

Kier signs deal for £169m Luton hospital revamp

Main construction work to start this month and last until 2024
6 days ago

Willmott Dixon nabs £30m Kirklees police HQ

Work to start within next few weeks on regional police HQ
6 days ago

Kier reported to be in talks to buy Tilbury Douglas

Talks reported to be at an advanced stage between both boards
7 days ago

Finance sealed for next-generation London office job

Goldman Sachs takes stake in London Bridge office project
7 days ago

Contractor services