Any formal terms agreed will depend upon who the freeholder is but it is thought that this will involve an increase in ground rent calculated by reference to the Retail Prices Index (RPI) rather than a ground rent that doubles in each 10 year period of the lease term, which can lead extortionate annual ground rents and the likelihood that a property is unmarketable as this onerous increase in ground rent is not accepted by a large number of mortgage lenders. The RPI increase is one that mortgage companies appear to be generally satisfied with and so it should ensure that your property can be mortgaged and therefore sold.
Taylor Wimpey says they have undertaken a comprehensive review and have looked at the concerns raised by homeowners regarding the saleability and mortgageability of these properties which has led to the creation of the scheme. It is reported that Taylor Wimpey has set aside £130 million for the Ground Rent Review Assistance Scheme to cover the extensive legal costs and compensation payments associated with the scheme.
In practical terms, a Landlord and homeowner will enter into a deed of variation to amend the ground rent clause from one that doubles every ten years to a typical clause whereby it increases in line with the Retail Price Index every 25 years.
However, the process to introduce deeds of variation is unlikely to be straightforward, as the freeholds were sold by Taylor Wimpey to investment companies. They are going to have to agree a deed of variation with investment companies who are unlikely to give up the guaranteed ground rent income without significant compensation.
There are some important points about the scheme which homeowners should be aware of:
• It only applies where the ground rent doubles every 10 years.
• It only applies if you bought directly from Taylor Wimpey and still own your property.
• It does not apply if you own the property as a Company or other corporate entity.
• It’s not guaranteed – there is no legal obligation for Taylor Wimpey to offer the Scheme and it relies on Taylor Wimpey reaching an agreement with your current landlord. If they can’t reach agreement with them, they can’t offer the scheme to you.
• Where the Scheme does apply Taylor Wimpey will pay up to £750 towards your legal costs.
Linder Myers Conveyancing team adopts a proactive and personal approach to all residential property matters and have extensive experience in dealing with complex leasehold matters. For further information regarding the ground rent assistance scheme the please do not hesitate to Call Us on 0800 042 0700 or email firstname.lastname@example.org
We will limit our fees for dealing with the matter to the £750 paid by Taylor Wimpey.