Ground Rent Clause - Taylor Wimpey new apartment

[Ed999]

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

 

 

A Solicitor will have 3 'A' levels, a University degree gained after a 3 year law course, a year's post-grad at the College of Law, and two years as a trainee in practice.

 

He has to pass a lot more subjects than just freehold conveyancing; subjects such as litigation, trusts, contract, tort, and company law, all of which crop up alarmingly often in land law cases. I have some experience at CAB level of how complex a seemingly straightforward house purchase can become when things go wrong.

 

When the chips are down you wouldn't want someone representing you who knew as little about the law as a licensed conveyancer.

[Garrypark]

Check your maths - its worse than you think - Taylor Wimpey will be charging you £8000 per year in ground rent NOT £4000 !

 

initial £250

yr 10 £500

yr 20 £1000

yr 30 £2000

yr 40 £4000

yr 50 £8000

and £8000 EVERY YEAR UNTIL YEAR 125.

 

The Taylor Wimpey CON

[andydd]

Check your maths - its worse than you think - Taylor Wimpey will be charging you £8000 per year in ground rent NOT £4000 !

 

initial £250

yr 10 £500

yr 20 £1000

yr 30 £2000

yr 40 £4000

yr 50 £8000

and £8000 EVERY YEAR UNTIL YEAR 125.

 

The Taylor Wimpey CON

 

..and if my brain is working correctly this amounts to £157500 payable in the first 50 years, I'll pay £1500 :)Andy

[Garrypark]

My solicitor has said that the doubling every ten years of the ground rent stops after 50 years, meaning that at that point the ground rent will be £8000 per year. i have withdrawn from my purchase of a two bed flat in Borehamwood. if Taylor Wimpey dont refund my depost in full, i will take legal action.

 

in addition, i am raising this with the Office of Fair Trading.

 

Garry

[Aequitas]

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.

 

We know that.

[Aequitas]

If you go here you can see what is required to become a licensed conveyancer: https://www.clc-uk.org/documents.php?docID=CLC0001

 

Clearly what a licensed conveyancer has to study is not as much as a solicitor has to study. Whilst it is the case that all branches of the law tend to overlap, licensed conveyancers are studying branches of law that relate to conveyancing which is the area they will be practising in. It should also be borne in mind that neither licensed conveyancers nor solicitors learn everything they need to know to do conveyancing and that a lot of what they learn has no practical application.

 

A licensed conveyancer has to go through two years' training; all that training will be in the field of conveyancing. A solicitor also trains for two years but typically only a quarter of his time will be spent in a conveyancing department. Now of course everyone is different, but I think that on average a newly qualified licensed conveyancer is going to have something of a head start on a newly qualified solicitor for the very simple reason that when practising the law experience is as important as knowledge of the law.

[Ed999]

Rather than bashing licensed conveyancers ourselves, let's encourage the BBC to!

 

 

Seriously though, why not encourage the BBC to bash the developer ?

 

Look at this thread: BBC Rip Off Britain - by BankFodder ‎(Site Team)

 

The BBC are looking to make a documentary about people who've been ripped-off, and this developer is running the biggest rip-off I've come across in ages.

 

The two of you who have nearly fallen into this trap might be interested in contacting the BBC1 programme office, to offer your stories. If so you can e-mail a BBC researcher at [email protected]

[Foxyfox]

I sent TW a reply last week to say 'I am OUT' and have asked for my deposit to be returned. They have suggested someone from their corporate office would be getting in touch with me next week to discuss the next steps.

 

Thanks for all of your suggestions, contibutions and guidance.

I am now in full campaign mode and feel it necessary to flag this up with the local council, the local MP, and BBC .. thanks Ed999 for the email address - I for one would surely be dropping them an email in this regard. Big builders can not just hold buyers at ransom - and why isnt the government protecting the interest of us First time buyers.

I have lost considerable time and money in the process of enlightenment - but it has been worth the while.

 

Further none of my mates are gonna be buying from TW unless the company thinks hard to change the clauses within their contracts.

[stepic]

I am also looking at buying into this East Croydon development. I was initally taken aback by the ground rent clause but frankly I think you are all perhaps being a little alarmist about it. Yes it will cost £80,000 for the 10 year period between years 50-60, and every 10 years after that, but are we not forgetting this is in 50 YEARS?! Rent doubling every 10 years equates to approx 7.18% per annum, so whilst being ahead of inflation I wouldn't say it was 'astronomical' given it wasn't so long ago savings rates were around that for term bonds etc. Furthermore this clause is in every one of Taylor Wimpey's contracts, so we're talking about thousands of people being affected by this. If, in 20 years time, it somehow becomes unmanagable, there's going to be an army of people ready to take action, and then then TW will have to deal with it or face a PR disaster. I've seen people querying this clause on message boards going back to 2007, yet it evidently hasn't affected sales for TW. I think people are being alarmed by the £80,000 figure without taking inflation, the time scale involved, and just how much the property value/tenant rents/etc will be in the year 2061! I really don't feel I'm being naive about this.

Edited July 7, 2011 by stepic

[Ed999]

I have already explained in this thread - more than once! - that this problem takes effect NOW !

 

This is an IMMEDIATE problem. That means it affects you - TODAY.

 

 

The ground rent payable under the lease is a very important element of the formula used in the 1993 Act to calculate the present value of the freehold, and this is the basis of calculating the price which the leaseholders must pay TODAY if they apply under the Act to purchase the freehold of the building.

 

This is NOT some theoretical problem for the dim and distant future. It is ruining people's lives today.

[andydd]

I have already explained in this thread - more than once! - that this problem takes effect NOW !

 

This is an IMMEDIATE problem. That means it affects you - TODAY.

 

 

The ground rent payable under the lease is a very important element of the formula used in the 1993 Act to calculate the present value of the freehold, and this is the basis of calculating the price which the leaseholders must pay TODAY if they apply under the Act to purchase the freehold of the building.

 

This is NOT some theoretical problem for the dim and distant future. It is ruining people's lives today.

 

Very true...although thge leaseholder could take advantage of RTM without any freehold purchase but yes, RTE and informal purchase of the freehold could be made impossible but the current setup, also be aware that any ground rent debt would quickly be above the £350 limit at which the freeholder can take forfeiture action shoulkd the leaseholder run into problems.

 

Personally I'd walk away from the property as it raises too many problems.

 

Andy

[Ed999]

also be aware that any ground rent debt would quickly be above the £350 limit at which the freeholder can take forfeiture action should the leaseholder run into problems.

 

 

Oh, hell's bells!

 

I hadn't even thought of that one. You're quite right, of course. It really puts the tenant on the spot if almost any kind of service charge query comes up, because the landlord will be able to threaten forfeiture of the lease in nearly any situation if he's given a free 'standing start' of £250.

 

My experience is that a threat of forfeiture really puts the wind up most leaseholders. Who can then be panicked into paying almost anything.

 

I have a real loathing of service charge disputes, because the cards are so heavily stacked against the tenant.

[stepic]

I have already explained in this thread - more than once! - that this problem takes effect NOW !

 

This is an IMMEDIATE problem. That means it affects you - TODAY.

 

 

The ground rent payable under the lease is a very important element of the formula used in the 1993 Act to calculate the present value of the freehold, and this is the basis of calculating the price which the leaseholders must pay TODAY if they apply under the Act to purchase the freehold of the building.

 

This is NOT some theoretical problem for the dim and distant future. It is ruining people's lives today.

 

What if we don't intend purchasing the freehold?

 

Put it this way, in the year 2040 the ground rent pa will only be £1,000. That's 29 years from now. I'd like to see what other ground rents will be like in 29 years because I'm sure they'll be more than £1,000. Are your fears purely based on the freehold element? Is a ground rent of £1,000 in 29 years or £2,000 in 39 years going to be severe enough to affect the value of freehold? These figures just don't alarm me at all. How much was the value of property 29 years ago? How much was a Big Mac?

 

I'm interested in your views howeever as I'm about to commit to a significant amount of money, but I'm just trying to make an informed decision - to sort out the rational argument between panic / fearmongering and being naive and blase.

Edited July 8, 2011 by stepic

[stepic]

I can't believe we have to code our paragraphs!

Edited July 8, 2011 by stepic

[Ed999]

What if we don't intend purchasing the freehold?

 

 

I'm sorry to have been so unclear on the point that I've left you with the impression that you have a choice in the matter.

 

In my opinion the proposed high ground rent is likely to make the statutory purchase price of the freehold so great as to be unrealistically out of line with ordinary market prices, making enfranchisement under the 1993 Act potentially unaffordable.

 

You should also carefully consider whether the potential purchasers of these flats are likely to have the additional financial capability, once having paid for the leasehold interest, to stump up substantial extra money - many thousands of pounds extra each - to buy the freehold, even if it was obtainable at ordinary rates, in the current difficult economic circumstances.

Edited July 8, 2011 by Ed999

[stepic]

In my opinion the proposed high ground rent is likely to make the statutory purchase price of the freehold so great as to be unrealistically out of line with ordinary market prices, making enfranchisement under the 1993 Act potentially unaffordable.

i'll be honest when I say I don't know too much about enfranchisement but is the statutory purchase price of the freehold based on, amongst other things, the current ground rent or the proposed future ground rent also?

[Ed999]

The calculation takes into account the ground rent per annum together with the length of the unexpired term, in a manner which - roughly speaking - tots up the ground rent for the full remaining period of the tenancy.

 

Complex calculations are applied to the total sum so derived, to discount for certain factors. But I'm not a RICS Surveyor, so I can't explain that aspect of it in any detail.

 

You'll want to consult the Act, and the various schedules to it which govern how the ground rent and the other factors are used within the statutory formula.

[stepic]

In my limited knowledge I would have thought the fact the ground rent caps at £8k between years 50-120 (that is, 70 years!) would seem quite favourable more than anything. It must be a complex calcuation indeed trying to calculate a ground rent going 100+ years into the future...

[mariner51]

Not really stepic, my ground rent has a term of 999 years (2960) at £10 pa

Last time I checked, freeholder suggested £500 + all coneyancing costs to purchase freehold.

Could have had it for £70 when offered early on.

I also own a Victotorian terr whose lease (GR) was orig 99 years. This had problems for Leasholder in the last 20-30 yrs of term.

My g'father's adage was buy the freehold asap.

As for TW deal, over 51 years ~£100,000 will have been paid in ground rent alone and a bigger burden on future Leasholders.

Once you have bought the property, purchase of freehold is curr subject to the formula mentioned.

My earlier suggestion was to offer to buy freehold as orig purchaser for a premium based on say £250 pa ground rent.

Most houseowners move on average every 7 years, I have stayed 35 yrs, hence my regret of not buying the freehold for £70

Housebuilders are still suffering in the current economic climate. Whilst there is currently a lack of affordable housing, builders cannot afford to build to current standards for such low prices. Also the post-war baby boom is tailing off and birth population will fall, easing this pressure if immigration is controlled. I predict that many first=time buyers, esp singles, cannot curr afford to buy a home of their own, as evidenced by the growth in the rental property sector in certain areas. I suggest we are now in a 1950's economy and unable to rely on a 1980;s boom in property prices or inflation.

[Ed999]

If anyone is interested in further details, the 1993 Act can be read on-line at:

 

Leasehold Reform, Housing and Urban Development Act 1993

[a_chou]

My solicitor has said that the doubling every ten years of the ground rent stops after 50 years, meaning that at that point the ground rent will be £8000 per year. i have withdrawn from my purchase of a two bed flat in Borehamwood. if Taylor Wimpey dont refund my depost in full, i will take legal action.

 

in addition, i am raising this with the Office of Fair Trading.

 

Garry

 

Hi Garry,I find myself at the exact same situation as you did when you made this post. (of course with the same developer for their Croydon property).Did u get a full refund of the deposit?

[Aequitas]

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.

 

The Rent Act 1977 is still in force.

 

The provisions to which I refer are set out in section 127 (as amended) as modified without altering the text by section 115 of the Housing Act 1988. I leave others to work out the combined effect.

 

http://www.legislation.gov.uk/ukpga/1977/42/section/127

 

http://www.legislation.gov.uk/ukpga/1988/50/section/115

[Ed999]

The provisions to which I refer are set out in section 127 (as amended) as modified without altering the text by section 115 of the Housing Act 1988. I leave others to work out the combined effect.

 

http://www.legislation.gov.uk/ukpga/1977/42/section/127

 

http://www.legislation.gov.uk/ukpga/1988/50/section/115

 

 

Yes, that's correct. It's section 115 of the Housing Act 1988 which - over 20 years ago now - abolished the concept of illegal premiums, by effectively repealling s.127 of the Rent Act 1977.

[stepic]

Ed999, I have been advised (by an independent party, not TW) that once I have owned the flat for 2 yrs I can claim a statutory lease extension where the term increases by 90 yrs but more importantly the rent falls to a peppercorn. A lease for 125 yrs where the ground rent that doubles every 10 years for the first 50 yrs with a flat worth £235k would cost around £15k plus the landlords legal and valuation fees. As time passes the cost rises After 2 yrs £15k (ie as above) After 5 yrs £17.3k After 10 yrs £22.7k The worry is that after 8 yrs the ground rent increase to £500 is just 2 yrs away and only 12yrs from becoming £1,000. This could, as you say, have serious consequences on its resale value particularly if inflation is less than 7% per annum. Trying to organise a collective purchase of the freehold, as you suggest, may save some legal costs but there would be no savings as the formula is the same. To get 40 people to raise £15k each in these troubled times would be nigh on impossible... If I can get the £17.5k together within 5 years, and reduce ground rent to a peppercorn, then this solves the issue does it not?

[Ed999]

I have sent you a PM about this, explaining what I see as the potential drawbacks in your proposals, but my real advice to you is to consult a Solicitor because you urgently need a level of financial and investment advice which isn't available on this forum.