Caught in a trap! Taylor Wimpey “sorry” for ripping off leaseholders!
Some mistakes are hard to fix. It is better to be careful – not sorry!
Taylor Wimpey used a trading statement last week to announce their ‘conclusions’ following a review into the company’s historic lease structures. This focused solely on a specific lease structure used from 2007 to late 2011, which provides that the ground rent doubles every 10 years until the 50th year. In doing so, the company created a new asset class that is now very attractive to specialist investors, because it equates to an annual interest rate of 7%. Taylor Wimpey claimed these leases “are considered to be entirely legal.” It remains to be seen whether the charges would be deemed by a court to be ‘fair and reasonable’ Under the Unfair Terms in Consumer Contracts Regulations 1999.
Taylor Wimpey now admit 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.” Surprisingly, Taylor Wimpey says the total cash outflow of around £130million “will be spread over a number of years.” In addition, this only applies to the “qualifying customers subject to eligibility checks” – only those owners who bought from Taylor Wimpey are to be “helped.”
Ground Rent Review
Taylor Wimpey has written to buyers who have complained about their leases with the onerous ground rent doubling clause. In the letter Taylor Wimpey outline its “Ground Rent Review Assistance Scheme” funded by the company, which offers to negotiate on the customers’ behalf with freehold owners for a ‘Deed of Variation’ to “convert existing doubling leases to an alternative lease structure incorporating materially less expensive ground rent review terms.” with Taylor Wimpey covering the financial cost of doing so”.
Enough is enough! What will it take before government finally acts, not only to end the misery faced by the majority of people that buy new homes, but also to drastically reduce the likelihood of another death caused by a defect in a new home? Last week a defect in a Taylor Wimpey new home injures a 10 year old girl.
Time for action? APPG Chair Oliver Colvile MP
Since the APPG Inquiry published its Report ‘Into the Quality of New Homes’ three weeks ago, there has been zero coverage of its recommendations in national media. On a personal level, I have written to every single one of the 650 MPs asking for their support and to lobby the DCLG for the introduction of a New Homes Ombudsman. Just one MP has replied so far. Is anyone prepared to do anything before someone else is killed in a defective new home?
On 15th October 2005, a four-year-old boy died from chest injuries after a 50kg (110lb) stone mantelpiece over a fireplace fell on top of him at his Persimmon-built family home in Coulthard Close, Towcester.
In February 2008, Elouise Littlewood was 26 when she died in the flat she owned with Notting Hill Housing Trust built by Barratt Homes at their Bedfont Lakes complex in Hounslow. A post-mortem carried out on the body found the concentration of carbon monoxide in her blood was 77 per cent. Her lodger, Simon Kilby, was left with permanent brain damage after he was discovered unconscious on the sofa.
Only this morning I learned that on 28 July 2016, a radiator had detached from a wall and had fallen on 10 year-old Gemma Fever in the kitchen of the family’s Taylor Wimpey new home at their Rackenford Meadows development in Tiverton, Devon.
It would appear that the house builders’ share price rise since the financial crash of 2008, has been built on the same dodgy foundations as some of their houses are. A business model built on selling sub-standard houses to sub-prime borrowers.
This was illustrated during the first two days of trading following the UK’s historic vote leave the EU. Worst hit in the initial market panic were Banks and shares in the listed house builders. Despite this, some ever-greedy directors used the Friday crash to buy more shares on the cheap, known as “catching a falling knife” and promptly lost another 15%! Taylor Wimpey Non-Exec director Dame Kate Barker, 59, who produced the Barker Review on housing supply in 2004 – which resulted in the industry setting up the HBF Customer Satisfaction Survey two years later, but has failed to have any impact on improving either supply or quality – bought 20,000 Taylor Wimpey shares for £26,953 but the shares closed down 15% leaving her with a paper loss of £3,800.
At last! Peter Redfern admits quality is being compromised in the rush to build new homes
Taylor Wimpey CEO Peter Redfern has said that the Government’s target to build a million homes by 2020 is unachievable and quality will be compromised if the industry does try to meet it. Well if anyone should know about compromising the quality of new homes it’s Redfern! Taylor Wimpey has a terrible reputation for building poor quality homes and when their customers complain, an equally poor record and attitude to fixing these defects. This, despite the claims made on Taylor Wimpey’s website including: “The standard of home building in the UK has never been higher than it is today.” ” it’s like buying a brand new car and driving it out of the showroom” Only with a new car it is unlikely to have as many problems as a new Taylor Wimpey home!
Only last November, Taylor Wimpey were extensively featured on the Dispatches Documentary “Britain’s Nightmare New Homes.” In 2012 Taylor Wimpey were again panned on the BBC Watchdog programme.
The company’s unhappy buyers regularly lambast the builder on social media with the twitter feed #thinkwimpeythinktwice. On 5th December 2015, BBC South today recently featured the story of Evelyn Lallo who has been living in temporary home since June 2015, whilst Taylor Wimpey sorts out serious defects.
Pete Redfern Taylor Wimpey CEO is Corbyn’s appointed housing tsar.
It would appear new labour leader Jeremy Corbyn has appointed Pete Redfern, chief executive of Taylor Wimpey, to lead a review of housing to help form Labour policy on the issue. Quite what housing expertise Corbyn thinks Redfern, with his background in accountancy, can bring to the table is a mystery to me. If is often said that accountants know the price of everything and the value of nothing. Redfern trained as an accountant with KPMG. He then became financial director of Rugby Cement before he joined George Wimpey in 2001. He became CEO of Taylor Wimpey in July 2007 following the merger with Taylor Woodrow.
It has emerged that Corbyn’s newly appointed housing adviser is the CEO of a British company that has been associated with tax avoidance. Mr Corbyn, you have chosen….. poorly!
Documents show housebuilders Taylor Wimpey had a Luxembourg division which it used to cut its UK tax bill – exactly the kind of scheme that Corbyn and Shadow Chancellor John McDonnell have pledged to bring to an end.
The NHBC 2014 ‘Pride in the Job’ Quality Awards have recently been announced and it is clear that most of the major house builders have not improved the quality of the homes they build. See the house builder league tables here for awards in 2014 and previous years.
Last year Barratt made history with 102 of their site managers winning awards for quality. This year, despite building more homes on more sites, Barratt won 13 fewer awards – 89 in total, followed by Taylor Wimpey with 70 – just two more than last year!
The remainder of the largest house builders won just a handful of quality awards, much as they did last year – Linden 5, Bellway 29, Redrow 13, Crest 12, Bovis 4 and Berkeley 12. The biggest shock was again Persimmon, the largest house builder by market value, winning a pitiful 8, even less than the meagre 13 their site managers won in 2013! Clearly this company has problems and appears to be indifferent to the quality of the homes it builds.
It is becoming an increasing concern that the NHBC hand out awards to certain builder’s site managers regardless of their personal management ability or the quality of homes built on their site. Last year, the NHBC gave Taylor Wimpey’s Richard Crawford a Quality Award for his site at The Chariots in Andover. Since then, many unlucky homebuyers have discovered their homes were not only poor quality, but in some cases also potentially dangerous, with various electrical faults despite passing an “inspection” and incorrectly wired boilers. One buyer (full story here) has taken over 35 days off work to allow various trades access to his home to fix and repair the defective workmanship. So far (8 months on) CEO Peter Redfern has failed to get personally involved and has not even replied to the owner’s many detailed letters. Yet this site manager won an NHBC Award for “Quality” for this site!
After a a few problems and issues with his new home, despite the completion date being postponed by a month (6th December 2013), one unlucky buyer recently told us that Taylor Wimpey had constantly threatened him with legal proceedings on a daily basis. Amazingly Taylor Wimpey and both the respective solicitors allowed legal completion on his new home without the Help to Buy funding in place and later transferred to Taylor Wimpey – an underpayment shortfall of £44,000.
Mr K told us: “In the first week of January, we learned that our solicitor had not sent us the Help to Buy equity release form to sign. He played this down claiming it was a simple paperwork mix-up or oversight. Two days later, we received a call from Taylor Wimpey informing us that they are going to take us to court because for breach of contract as we have not provided the full funds on completion.”
“It transpired that the Help to Buy money had not been released to Taylor Wimpey and they cannot take our solicitor to court, they can only take us to court. The lady from Taylor Wimpey said that even if they did get the balance of the money, we had still breached the terms of our mortgage and they were going to report this to our lender and the mortgage would be revoked.”
“Next we then get a call from the lady who deals with Help to Buy (Radian homes) who inform us that the mortgage offer is incorrectly worded and needs to be changed, otherwise they cannot release the money to Taylor Wimpey. Our solicitor insists the mortgage offer doesn’t need to be changed, Help to Buy insist it does and in the meantime, Taylor Wimpey continue to call us on a daily basis threatening to take us to court.”
“Both Taylor Wimpey and Help to Buy say that our solicitor is incompetent. Our solicitor then suggests that they are both partly to blame as well. We are considering appointing a professional negligence solicitor to take over the file with Taylor Wimpey saying that if we did, that they would take us to court straight away.”
Can new home buyers really believe what the house builders claim on their websites and in their marketing material? A quote from Taylor Wimpey’s own website claims:
“The standard of home building in the UK has never been higher than it is today” “We’re dedicated to building quality new homes. It’s the core of our business, which means that we know a thing or two about it.”
I don’t believe it!
Even Victor Meldrew would have trouble with this defect!
If this really is the case, how could a defect like this happen?
Even worse, why was it not seen by anyone and corrected prior to legal completion?
“Every team has a dedicated Site Manager, who is responsible for making sure that your home is built to the highest possible standard.”
So how and why did this happen?
This defect was created at the first-fix stage. The door frame should have been packed off the wall nib using a timber stud to ensure the light switch would fit between the architraves later on. The light switch may even have been fitted in the wrong position altogether, at the very least the electrician should have noticed there could be an issue during his second-fix. The “dedicated site manager” didn’t check this stage of the build presumably!
Are snagging inspectors worth it? This is a question often asked by new home buyers, especially as it comes at a time when they have other non-optional costs such as stamp duty, legal fees and mortgage fees to budget for.
New homes are required to be built to the relevant building regulations and warranty standards. Whether any new home meets these standards will depend on the level of inspection and supervision throughout the build process. However, compliance should not be taken for granted.
Many people buying a new home do not even think about hiring a professional snagging inspector. They expect, quite rightly, that their new home will be built with care and that all those statements and promises regarding quality from the house builder will be reflected in the finish of their new home.
According to the HBF Customer Satisfaction Survey, 91% of new homebuyers reported problems with their new home after they moved in. A quarter (27%) of new homebuyers experienced more problems than they had expected.
Pete Redfern, Taylor Wimpey’s CEO, went on the offensive on Monday in a blog on the company’s website regarding Ed Miliband’s announcement during the Labour Party conference last week, that if elected, he will introduce a “use it or lose it” policy on land banks with planning approval, if house builders fail to build on them.
Redfern joined the growing list of builder CEO’s to bemoan the planning system saying: “the greatest challenge for our industry is getting sites through our slow and complex planning system, and then getting them started as quickly as possible”
He denied that house builders were sitting on land with planning permission in order to benefit from increases in land value and house prices, claiming: “if we could be criticised for anything, it is rushing the final stages too quickly to get a new site open – born out of frustration with a planning process which has often taken many months longer than expected”
Redfern was particularly critical of planning conditions, which he said: “can be as many as 100 but the average is around 25. They can vary from obtaining a ‘newt licence’ to approval for a road access layout.”