Hi all

I am in the phase of exchanging contracts for a Taylor Wimpey apartment I am looking to buy in East Croydon.

This evening I received the contract from my conveyancer ( who was recommended by Taylor Wimpey). Many people have suggested that there are hidden clause in the contract which I should carefully note and if not happy inform my conveyancer.

While reading I realised a clause suggesting Ground Rent to be 250 pounds doubling every 10 years ? ? with the lease of the flat being 125 year , the amount of ground rent payable during the last 10 years would be astronomically high 512,000 (half a million).

Can someone advice whether this is common - or a money making gimmic applied by Taylor Wimpey - what can I do on this front.

I also noticed the contract does not specify any date of completion which is worrying as I have heard horrific stories with the same developer not completing on time.

Thanks

Hi fox

Welcome to CAG

The guys will be happy to advise as soon as they are available.

Thread moved.

WARNING! WARNING! WARNING!

DON'T SIGN THE CONTRACT UNDER ANY CIRCUMSTANCES !!!!!!!!!!!!

The type of clause you describe, contained in your draft lease, is what is known among solicitors as a 'Blue Dolphin' clause, so-called after the name of a very well known court case of a few years back. It is a ground rent clause that appears innocuous at first sight, but on a careful analysis ramps up the rent to a bankruptcy level - making the flat completely UNSALEABLE.

Make sure of your facts though: take the lease to a SOLICITOR for a second opinion.

If what you say is correct, then you have, most unfortunately, been landed with a NEGLIGENT conveyancer. Ask yourself what else have they missed?

My advice: sack this negligent fool. You cannot proceed with the intended purchase. The landlord will never agree to change this type of clause, because its sole purpose is to profit from an unwary tenant.

Contact the Croydon local newspaper. They will love a big story like this: make yourself a hero in the headlines, by warning off people in the district who might be trying to buy flats in this development.

Contact Anne Robinson at 'Watchdog', MC4 C5, Media Centre, Wood Lane, London W12 7TQ. The BBC would love a chance to expose this sort of sharp practice by such a well known developer.

I would NEVER agree to be represented by a crony of the Vendor. The buyer always needs an independent lawyer of their own choosing.

'Blue Dolphin' leases: http://www.lawgazette.co.uk/news/rogue-rent-review-clauses-are-hidden-traps-solicitors

And here: http://www.consumeractiongroup.co.uk/forum/showthread.php?144259

And here: http://www.lawgazette.co.uk/news/rent-review-clauses

And here: http://www.landlordzone.co.uk/forums/showthread.php?20255-Ground-rent-doubling-every-10-years

Are you leaseholder of a Taylor Wimpey flat ?

http://es.homesandproperty.co.uk/groundrent.html

Hi there. If you visit LandLordZone Forum (http://www.landlordzone.co.uk/forums/forumdisplay.php?11-Long-Leasehold-Questions) which deals with LongLeasehold Issues you may see that similar ground rent clauses do pop up from time to time, in fact I commented on one the other day (although it was on a different topic).

Yes, as you rightly point out the price would become ridculous and as such would almost certainly fall with the Unfair Terms in Contracts legislation but it may be that it woulsdnt be deemed unfair untill it reached the high thousands, now it is quite possible to create a deed of variation before contract are swapped, basically you create the changes you want and it is then agreed and signed by both you and the freeholder (and perhaps management company if they are party to the lease).

This happened when I bought my property, the ground rent amount was changed (although the actual facts are the landlord claimed it had changed from £30 to £75, but many years later when I obtained a copy of the deed of variation from the land registry, it hadnt been changed yet i had been paying the higher amount and I had to sue to get the money back, which was a nice £1000 windfall when taking into account interest and court fees).

Anyway, go back to your conveyancer/solicitor and ask to do a deed of variation, or, if the freeholder doesnt agree then walk away.

Andy

Anyway, go back to your conveyancer/solicitor and ask to do a deed of variation, or, if the freeholder doesnt agree then walk away.

How can Foxyfox trust this licenced conveyancer to advise him further in this matter, when the conveyancer is so incompetent he didn't even spot this disasterous ground rent clause?

I don't wish to appear rude, but if the clause was so obvious that EVEN a client could spot it how bad must this so-called lawyer be?

Ask yourself what else might be hidden in the small print in the lease that this negligent conveyancer has missed?

How can Foxyfox trust this licenced conveyancer to advise him further in this matter, when the conveyancer is so incompetent he didn't even spot this disasterous ground rent clause?

 

I don't wish to appear rude, but if the clause was so obvious that EVEN a client could spot it how bad must this so-called lawyer be?

 

Ask yourself what else might be hidden in the small print in the lease that this negligent conveyancer has missed?

Aha..true..should of added get another conveyancer, although I wish now mine had informed me a bit more about some of the pitfalls within my lease, although they are more complex issues such as how the cost of common land work is to be split (it appears there is no obvious answer in the lease), and not as obvious as the ground rent issue here.

Andy

There sure are plenty of difficult legal issues hidden in most leases, of such complexity that even an expert can't give a firm answer.

What is perhaps more worrying is when the legal issue is not complex at all, in a technical legal sense, but the lawyer still misses it. In my experience, that usually indicates a solicitor or unqualified paralegal who normally only does freehold conveyancing, and really knows s*d-all about leaseholds.

Chances are the licenced conveyancer in this case never even read the lease, but just did what they typically do - photocopied it, sent the copy out to the client, and pretended that this is a substitute for giving advice.

Always remember: someone becomes a licenced conveyancer in 99% of cases because they weren't capable of passing the university exams needed to become a solicitor or a barrister. Do you really want to risk your life savings to such a person?

I always ask, casually, which university they went to: a discrete way of finding out whether they actually went to one!

Thank you all for your valuable comments.

Believe me I am now wondering why I am paying a substantial fees to my Conveyancer who is probably not looking in my vested interest.

I have received the following reply from my conveyancer on the subject :

''The rent review provisions are standard across Taylor Wimpey’s leases and this cannot be changed as all the Leases for the development have to be in the same form. The rent is doubling every ten years, however you must bear in mind the rate of inflation. Where X amount may see like a large sum at present it may not be in the future. If the ground rent did become an unrealistic amount – all leaseholders will be in the same position, and there would be options available to you and other leaseholders. You could approach the Landlord and ask them to reduce the ground rent figure, although this would be discretionary.''

for the other concerns I raised I received the following justifications

''

1. Due to the unforeseeable nature of future construction - the exact sizings of the property are not included within the contract. The plan for the plot is included within the contract and within the Lease showing the position/extent of the property.
   
2. It is unlikely Taylor Wimpey will agree to the insertion of a Penalty Clause if the property is not completed by the Completion Window. What we can request is a ‘Long Stop Date’ which means that if the property is not ready by the end of January 2012 you can bring the contract to an end. Would you like me to request this?
   
3. In previous experience Taylor Wimpey will not agree to amending this clause. They need the flexibility allowed due to the unpredictability as outlined in point 1 above. However Taylor Wimpey do have a clause in the contract confirming they will construct the property in line with the planning permissions.
   
4. We do not have a completion date yet for the property and completion will be on notice as per clause 2.1 of the contract."
   

I have asked my conveyancer to convey my concerns to the builder Solicitors - Even though I have been told nothing would change. I have suggested if this is a 'take it or leave it offer' then I would be happy to walk away and would expect the builder to refund my deposit.

Hhmm..this seems rather odd, assuming that inflation is 5% per year, then maybe every 10 years you could expect amounts to be worth 50% less, but you would still be paying astronomicall ground rent fees, probably far in excess of your mortgage and more than an average annual wage, the convayencers answer seems to be, go ahead with it and maybe you can reach an agreement to reduce the ground rent in the future !. He's wrong is saying there would be options available to you should the rent become unrealistic, the only possible one I can see is the Unfair Terms legislation.Andy

What the hell does he mean, IF the ground rent becomes unrealistic? For godsake! We can calculate it now, at half a million pounds. If he really believes what he said to you, he's a complete turnip-head.

The rent review provisions are standard across Taylor Wimpey’s leases and this cannot be changed

Based on this, I'd walk away.

The numbered points 1 to 4 are all reasonable. I've had these. They are industry standard clauses, and although it's irritating for the purchaser, in a property not yet built there's nothing you can do about these clauses.

The worrying thing is the lease conditions. In point of fact, you would be compelled to buy the freehold, but at a ruinous cost, because the 1993 Act takes into account the value of the ground rent: the higher it is, the bigger the amount the landlord can rip you off for if the leaseholders get together and try to purchase the freehold of the block.

Offer to buy the property free-hold (no ground rent) compare prices or comlpete as Leaseholder and initiate Freehold purchase.

How long does OP anticipate 'owning' property?

On the face of it G Rent increase clause is unacceptable.

Local press involvement now may dissuade pot purchasers.

It may be TW standard contract but any contract terms can be altered foc before exchange if other side agrees and both parties initial clause variation.

comlpete as Leaseholder and initiate Freehold purchase.

That would lead the purchaser into the exact disaster I mentioned in my previous post on this thread, so IMHO would be a disasterous course of action.

The rent review provisions are standard across Taylor Wimpey’s leases and this cannot be changed as all the Leases for the development have to be in the same form. The rent is doubling every ten years, however you must bear in mind the rate of inflation.

Applying the same calculation over the last 50 years the Taylor Wimpey doubling would give a rent 75% *higher* than that given by RPI rises. The annual rise is 7.2% per year compared with the Bank Of England target of 2% and way above the rate of the last 20 years.

This conveyancer is simply sucking up to the company that sends him most of his business! As Ed says drop him like a stone. Demand your money back on pain of complaining to his regulator.

Demand your money back on pain of complaining to his regulator.

If only! To the best of my recollection, licensed conveyancers have no regulator and no complaints procedure.

The Council of Licensed Conveyancers issues them a license to operate, but does not regulate them - it merely sets the exam, and if they pass it the Council has no further involvement.

This is one reason why they can abuse their position, by taking on an outrageous conflict of interest, and get away with it. This conveyancer has been imposed on the purchaser by the developer, even though it's now apparant to all concerned that the conveyancer is acting in the developer's interests, not those of his supposed client, the purchaser.

Before you opt for the cheapest conveyancer you can find, bear in mind that you get what you pay for. A solicitor will cost you more, but if something goes wrong there are complaints procedures and a regulator to back you up.

And a solicitor will know how to advise a buyer about a lease: you'll be hiring someone trained in all areas of law, backed by a university degree; not someone who knows next to nothing about the law, and once did a correspondence course in freehold conveyancing.

The following are the questions raised by my conveyancer and TWs reply marked in red.

1. Clause 11 – our client would like a restriction on the amount that the plot size can be altered.
   
2. Clause 23 – our client would like a penalty clause to be inserted, whereby if this clause comes into effect penalties will be payable by your client, for instance interest payable at the contract rate on the deposit held by them.
   
3. Extended Completion Window – our client would like this to be reduced to 6 months.
   
4. Rent review – our client would like the rent review clause to be changed to every 25 years as opposed to 10.
   

and Taylor Wimpey’s response:-

I can respond to the enquiries raised as follows:

1. I cannot agree this amendment. This clause is standard and should remain as drawn.
   

For an off plan development - the plot schema's are the only visible tool a buyer has to understand how his development would look like once completed. How can a buyer get any assurance if the developer is not ready to put a restriction within the contract indicating the allowable variance post completion ?

1. I cannot agree this amendment. This clause is standard and should remain as drawn. You client cannot expect to be put at this advantage compared to other plot purchasers and there is no way my client would agree the provisions suggested.
   

If I fail to pay the cost of the development - the developer wants to charge me for outstanding funds an interest 4% above the bank rate, however are not willing to invoke the same clause if they fail to develop on time ? how is this fair

1. I have now heard from my sales department. They advise that they will not agree to any amendment to the completion window but assure that completions are due to take place in Nov/Dec, if your client has been on site he will appreciate that the build is fairly advanced.
   

f they are so sure of delivering on time ( as they mention the development is going well ahead of plan) why not write it down within the contract. Put your money where your mouth is.

4. Again I cannot agree this amendment and it would not appear to be logical in any event. The ground rent under the lease doubles from £250.00 every ten years until the fiftieth anniversary of the term. These provisions are standard to all our development leases and your client cannot expect an exception to be made on their part.

This is somewhat re-assurring , the cap at the end of the 50 years is 4000, but does this mean the ground rent would remain constant for the remaining term (125 - 50 years) ?? I would appreciate everyones views on this as this is the real DEAL braker clause within the contract

I am confused, frustrated and have lost faith in both the conveyancer and the builder. I am now almost certain to walk away from the contract and would demand a full refund of my deposit tomorrow. I have also decided to spread the awareness to first time buyers like me - It is difficult as it is in the current economic times to get on the property ladder. If I was aware of all these in the first place I would have not wasted my time and money. I am baffled with the developers arrogance on the replies mentioned above - surely the buyers are no fools and should not be treated like one.

The ground rent under the lease doubles from £250.00 every ten years until the fiftieth anniversary of the term.

I note with some concern that the goalposts appear to be being moved on us, with substantial consequences for the final amount of the ground rent, which will be substantially not what you originally represented it to be.

Have you double-checked the contract to see if it includes the 50-year limit, and see if it says anything about after 50 years?

I don't know what rules apply in absence of a contract. I guess there must be standard procedures? Sounds like you need a solicitor to advise.

If the site is well advanced you may be able to visit and see whether things appear to be going as planned and whether you still like the property. The clauses (other than the ground rent clause) are pretty normal for a new-build - I bought a new build but I kept a very close eye on the development (much to the annoyance of the site managers).

I note with some concern that the goalposts appear to be being moved on us, with substantial consequences for the final amount of the ground rent, which will be substantially not what you originally represented it to be.

Indeed, so..the ground rent is £250 and will rise to £8000 in 50 years time, hefty but not as silly as the half a million we were talking about earlier, as I only pay £30 p.a indefinately then £8000 sounds a lot to me, but may not be unreasonable, bear in mind that the amount of ground rent (amongst other things) has an effect on the price of the freehold should you ever wish to purchase it.

bear in mind that the amount of ground rent (amongst other things) has an effect on the price of the freehold should you ever wish to purchase it.

This is, I think, the nub of the matter. A ground rent of this type will push up greatly the cost of freehold enfranchisement, possibly to a point at which the cost is prohibitive. It's a fairly cunning way to defeat an enfranchisement application under the 1993 Act.

But it probably also makes the flat unsaleable. Many mortgage lenders have quite strict rules about what they won't accept as good security, and rack-rent clauses that push the ground rent sky high are generally not acceptable to them.

This clause ought to be reported to the Council of Mortgage Lenders, but I bet no one has done so.

The other terms of the contract which are being proposed are typical of this sector of the housing market, and the builder won't change them. It's a 'take it or leave it' contract, not one open to negotiation, as I warned.

I am purchasing two bed taylor wimpey new build flat in borehamwood. My solicitor pointed out that rent (£250 year 1), doubles every 10 years. This means at year 50, rent will be £8000 peryear. This means that ,for example, byetween yr 50 and 60, one would have to pay TW £80,000 (over that 10 year period). Hazel -sales manager at TW borehamwood said that have so far had 18 exchanges, and thatmost buyers/solicitors have raised this, but no one has pulled out! Not sure i beleive her. I WILL NOT BE EXCHANGING!

Garry

Hi all

I am in the phase of exchanging contracts for a Taylor Wimpey apartment I am looking to buy in East Croydon.

This evening I received the contract from my conveyancer ( who was recommended by Taylor Wimpey). Many people have suggested that there are hidden clause in the contract which I should carefully note and if not happy inform my conveyancer.

 

While reading I realised a clause suggesting Ground Rent to be 250 pounds doubling every 10 years ? ? with the lease of the flat being 125 year , the amount of ground rent payable during the last 10 years would be astronomically high 512,000 (half a million).

Can someone advice whether this is common - or a money making gimmic applied by Taylor Wimpey - what can I do on this front.

 

I also noticed the contract does not specify any date of completion which is worrying as I have heard horrific stories with the same developer not completing on time.

 

Thanks

I am purchasing two bed taylor wimpey new build flat in borehamwood. My solicitor pointed out that rent (£250 year 1), doubles every 10 years. This means at year 50, rent will be £8000 peryear. This means that ,for example, byetween yr 50 and 60, one would have to pay TW £80,000 (over that 10 year period).

That is a very valid point, in that over ten years such a ground rent will cost you £80,000. Because of inflation, chances are that in today's money that will equate to about £1,000; but it is still a worrying prospect.

In reality, the flat will be unsaleable unless you enfranchise; so the builder is hoping to rip you off for a big fat second purchase price, when the desperate leaseholders try to buy the freehold under the 1993 Act.

TW borehamwood said that have so far had 18 exchanges, and thatmost buyers/solicitors have raised this

That's the lie: "most". The estate agent pretends that a large percentage of buyers have noticed this, but have not objected - trying to imply that this rip-off is an acceptable condition of sale.

but no one has pulled out!

Likely, isn't it. Not. Probably some licensed conveyancer is in the developer's pocket, and these 18 mugs - if they're not purely a fiction invented by the estate agent - were never told about the ground rent rip off, because their conveyancer was so negligent he never even understood what the clause meant.

A legal adviser to the purchaser has to sign a certificate for the mortgage lender, confirming - amongst other matters - that the provisions of the lease comply with the requirements of the standard mortgage instructions in leasehold cases approved by the Council of Mortgage Lenders.

I don't see how a Solicitor or Conveyancer can sign that certificate in a case such as this. The mortgage lender surely must have a claim against them in negligence if they do sign it under these conditions.

Even if they disclose the true ground rent to the purchaser, so that the purchaser has no claim in negligence himself, that is no bar to a claim by the lender for negligence, for failure to comply with the mortgage instructions.

All statements posted on this forum, including this post, are statements of opinion only.

"Nobody else has complained" is a lie used in every industry.

Tucked away somewhere in statute (Rent Act 1977) is a provision that it is illegal to charge a premium for the grant of lease where the rent exceeds a certain amount (it used to be two-thirds of the rateable value). Anyone who does so is guilty of an offence. Shop them!

Oh and the premium is repayable!

Always remember: someone becomes a licenced conveyancer in 99% of cases because they weren't capable of passing the university exams needed to become a solicitor or a barrister. Do you really want to risk your life savings to such a person?

This is unfair to licensed conveyancers.

1. Licensed conveyancers must pass exams equal to graduate/Law Society/Bar standard in contract, land law, conveyancing and landlord and tenant law.

2. If you instruct a solicitor you cannot be sure the matter will be dealt with by a qualified person.

3. A newly qualified solicitor will almost certainly know less than a licensed conveyancer of several years standing.

4. Licensed conveyancers must have professional indemnity insurance and so your life savings are no more at risk than if you employ a solicitor.

5. Licensed conveyancers know that "licence" is a noun whilst "license" is a verb.

...and, no, I am not a licensed conveyancer.

Tucked away somewhere in statute (Rent Act 1977) is a provision that it is illegal to charge a premium for the grant of lease where the rent exceeds a certain amount (it used to be two-thirds of the rateable value). Anyone who does so is guilty of an offence. Shop them!

 

Oh and the premium is repayable!

That used to be the law, under the Rent Act 1977. But that Act was repealled long ago: premiums can no longer be accidentally illegal.

And in this case no premium has been paid. The o/p has not purchased the property in question.