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Taylor Wimpey Announces £130m Leasehold Sticking Plaster Solution To Housebuilders’ PPI

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 Loddon Park Freehold but far from problem freeTaylor 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 ground rent review letterTaylor 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”.

The letter to buyers concludes: “we believe this is the best answer for you.”

But a look under the bonnet and we find this interesting insight contained in the Seeking Alpha transcript from a Taylor Wimpey Earnings Conference Call on 27 April 2017. In it Taylor Wimpey CEO Peter Redfern concedes:

“this [leases] is clearly an uncomfortable issue” [as they try to]  “work out what’s the best way to reduce the reputation issue for the group – a historic leasehold issue that we think is right to deal with but important to do and get right in one hit, which is what we believe this is”

“In terms of timing, we don’t expect this to result in a significant near sort of immediate cash payment from the group. We think it will be spread over a number of years.

But I think most importantly, we’re confident that this does not impact our ability to follow through on our dividend plans to potentially increase our dividends in 2018″ 

Some more questions raised by the Taylor Wimpey announcement of £130m to rectify the ground rent and leasehold house scandal

When asked specifically about the issue of leasehold new houses Redfern said:

“You’ll be aware there’s lots of noise around leases more generally. But our own use of leases on houses, for instance, is lower than many in the sector. And also, what stands out about this is the scale and the fairness. What’s interesting in terms of whether it becomes a wider issue which we think is unlikely, is that we haven’t had a single legal claim, including on these doubling ground rent provisions. Because people did have independent legal advice, the contract is very clear, this isn’t a case.”

 The sale of leases on houses historically, people knew they were buying a leasehold house” “And the other elements actually, sort of — people knew they were buying a leasehold house.”

Did they really Mr Redfern?  Many were forced, coerced, or otherwise financially incentivised to use housebuilders’ recommended solicitors, never a good idea and can hardly be described as “independent legal advice.” In fact a class action for negligence is being prepared against new homebuyers’ solicitors.

Many were told by sales staff, they could buy their freeholds for a few thousand in 2 years time, only to find the private firms that bought the freehold were asking £30,000 or more. Many were told, incorrectly, that leasehold house was virtually freehold. Ellie Taylor posted on the National Leasehold Campaign Facebook Group: “We were told ‘it doesn’t matter because it’s a 999 year lease and you will be long gone by then’ – I found out it was leasehold just before we signed to reserve, I went outside to call my Mum as I was concerned and they [sales staff] made out like I was being daft.”

On doubling ground rents, Redfern said:

“I still think if we’d have done a really good diligent job, we should have seen the issues at that point in time. But we didn’t. But we’re looking back now with the benefit of hindsight in a different world”

Asked if this was being done to “preempt government taking this on board and championing the home owners cause”:

“we think this specific lease class, with hindsight, isn’t quite fair. I don’t actually think it’s that likely that government will take retrospective action on that. And clearly, if we thought that was imminent or likely to happen, we wouldn’t be making this announcement today. We’d wait and see what that is. But how we read that situation is, that is unlikely.”

Ground Rent Review Taylor Wimpey It is clear to me from the transcript of this broker teleconference, that Peter Redfern has no intention of ever helping those that bought leasehold new houses to obtain their freehold, either at reasonable rates, or at no cost as part of a compensation measure. Indeed, it is clear Taylor Wimpey do not even believe they have done anything wrong selling new houses on a leasehold basis. It is to be hoped that those in government are not taken in by this token gesture (‘Ground Rent Review Assistance Scheme’) which only relates to ground rent doubling every 10 years and nothing else. Even that, Redfern predicts, will take a “number of years” to complete.

It is my opinion that Taylor Wimpey have broken ranks, in an attempt to claim a non-existent moral high ground over other miscreant house builders. Peter Redfern, no doubt in consultation with other housebuilder CEOs, who unlike Taylor Wimpey, have no plans to stop selling their new houses on a leasehold basis, made this move to give the impression the industry was contrite and doing something positive. Indeed the Leasehold Knowledge Partnership  said on their website that Sir Peter Bottomley and Jim Fitzpatrick MPs and co-Chairs of the APPG for Leasehold and Commonhold Reform, “were contacted by Taylor Wimpey last night [26 April]. They were invited to discuss the issue with CEO Peter Redfern at 10am” [27 April] following the announcement and ahead of the firm’s AGM an hour later.

This statement has the potential to pull the wool over the eyes of those in parliament who quite rightly, want the sale of new houses on leasehold banned and those leaseholders for whom it is too late, given an opportunity to buy their freeholds either at reasonable prices, or be given their freeholds by their housebuilders. Obviously the housebuilding industry does not want this. It will be very expensive, albeit still affordable, given the excessive profits being made and obscene levels of LTIP bonuses being handed to CEOs – most of which has only been achievable because of the Help to Buy Scheme.

The Taylor Wimpey statement has enabled the industry an opportunity shed some positive, pre-emptive light, on what has been and continues to be, nothing short of a national scandal, described in parliament as the “PPI of the housebuilding industry” that has been allowed (and currently perfectly legal – but not morally right) for many years. An industry-wide hoodwinking of new homebuyers, many buying with the taxpayer-funded help to buy scheme, now own virtually worthless leasehold houses.

The report of the All Party Parliamentary Group on leasehold reform, coincidentally published on the same day as Taylor Wimpey’s announcement stated:

“The current government has accepted the sale of new build leasehold houses is a key area in need of urgent reform. The Prime Minister, the Secretary of State and the Housing Minster have each argued strongly that there is no legitimate reason for the sale of leasehold houses unless for the exceptional circumstance where the developer cannot own the freehold.  The APPG supports the proposal to ban the sale of new build leasehold houses…”

There is not a single reason why legislation cannot be brought very soon after the election, to ban the sale of leasehold new houses.  Perhaps each party should make this pledge  in their manifestos.

It was mooted by Sajid Javid  that Help to Buy could be withdrawn for builders not selling on “fair terms” in his speech on 28 March 2017:  “Helping builders to get building“:
So I will look to ensure Help to Buy Equity Loans are only used to support new build houses on acceptable terms. This will send a serious message to the building industry: if you want the government to help you build and sell homes, you have to sell them on fair terms.”

It is time and it is right that Help to Buy is withdrawn.

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No Problem With New Home Quality Says HBF Stewart Baseley

Stewart Baseley, Executive Chairman of HBF interview on BBC Radio 4 Today – Saturday 11 February

Stewart Baseley HBFTrue to form the Home Builder’s Federation [HBF] the industry’s PR and lobby group, conducts a perfect whitewash on the facts as their executive chairman Stewart Baseley trots out a well-used, well-rehearsed HBF rhetoric. The two main points the industry is keen to focus on at the moment:
“promoting awareness of increases in output and rebut negative claims on build quality” are well covered. Mission accomplished! Move along there is nothing to see. Money well-spent? The HBF was funded mostly by its house builder members to the tune of £3,037,449 in the year to 31 December 2015.

Questions to Stewart Baseley, Executive Chairman of HBF
Do you accept there is a problem?
“No I don’t accept there is a problem although clearly there are in some cases that you have highlighted some of those on your report and I totally accept that anybody that’s in a situation where they have got a problem, it’s very serious for them.”

“No problem – some cases”
Fact: As Stewart Baseley knows, the NHBC paid out £90million in warranty claims for remedial works to fix serious defects in 11,000 new homes (an average of £8,181 each) in the 12 months to 31 March 2016. That equates nearly 9% of the 124,720 new homes built in the same period. In the previous year, the NHBC spent £86million on remedial works including £23million on foundations and £32million on superstructures to 11,000 new homes.

But the main housebuilders, satisfaction ratings have gone down
“They have gone down, well as an industry of course you have to put that into context the fact that first of all we went through the most tremendous recession seven or eight years ago and we lost getting on for half our workforce. As Oliver Colvile quite rightly says, capacity is a challenge and we have increased output over the last three years, by in excess of 50% and we are taking on and training tens of thousands of people to do that; in that context, we actually conduct what I believe is the biggest opinion poll audience research that is undertaken in the UK every year, I am not aware of anything bigger. We sent out 85,000 questionnaires in the last survey year to customers of new homes of all the builders that have been mentioned, we get about a 56% response rate we have about 45,000 returns, which is pretty impressive in terms of the sample size compared to most surveys, and around 85% of the customers of all those homes would recommend their builder to a friend. Clearly there are 15% who wouldn’t and there are a variety of reasons for that and I don’t want to suggest in any way that those reasons are not important and vital to the people that have got those challenges.”

“We have increased output by 50% in the last three years.”
Fact: In the year to 30 Sept 2013, 108,270 new homes were completed. The latest official government figures to 30 September 2016 show 141,690 new homes completed a rise of 31%! Furthermore the number of new homes being built is still 23% lower than the peak in the year to 30 March 2007. Surely Stewart Baseley is aware of the official statistics?

New Home Customer Satisfaction Survey
Yes satisfaction scores, in even this industry’s own manipulated survey (with some buyers being given £250 John Lewis vouchers for favourable responses!) have indeed gone down to 85%. It was good that Stewart Baseley acknowledged this. But of a total of 135,860 homes built in the last HBF survey year, 80,582 surveys were sent out by the NHBC and just 56%, 45,342 were returned representing just 54% of the homes sold privately.  Furthermore, not all survey responses are ‘validated’. Surveys returned late (not within 7 weeks of the date of the letter) are not counted as are those that are “not filled in correctly.” I would suggest if the responses of these surveys were favourable to the industry, they are used in the results!

The HBF state in their Annual Report:
“The Customer Satisfaction Survey and star rating scheme has played a key part in measuring industry performance and providing data to rebut negativity. To ensure the survey is seen to be as robust as possible, HBF and NHBC will be launching a review of the scheme.”
In other words, people like me can see through the hype and are (along with the APPG Inquiry) calling for a survey that is completely independent of the industry.

Well Stewart Baseley has certainly used the “data” to try and “rebut negativity”. By way of comparison, the John Lewis’ customer satisfaction survey score in 2016 was 84.9% and Amazon were top with 86.6%, both are streets ahead of anything the housebuilding industry does!

It is true the industry “lost” a large proportion of the workforce, not forgetting this was something companies within the industry chose to do at the time!

The level of dissatisfaction of those buying new homes is at its highest level since 2009 according to your national new homes survey, are you saying that survey is wrong?
“No I am saying that’s our survey, we are talking about a drop from 90% to 85% all companies and I know the CEOs and I know the managing directors of all the companies that were mentioned in the report, plus many other companies across the country and I am absolutely convinced of one thing and that is they all get up in the morning and go to work and all their people go to work with the intention of delivering a good product to a high service across the country.“ 

”they all get up in the morning and go to work with the intention of delivering a good product to a high service across the country”
Fact:  You only have to look at Taylor Wimpey’s Loddon Park development recent press coverage especially concerning Bovis, to know this just cannot be true, otherwise surely action would have been taken long ago to address the issues. 

“Now clearly things go wrong on building sites, we are working in all weathers with all sorts of raw materials that have to be imported and clearly there are challenges and I think most customers accept that actually is not necessarily possible to always produce a perfect house. The key thing is to make sure we deliver their house on time and where they do have issues and when they do have problems making sure we address.”

“not necessarily possible to always produce a perfect house”
Fact: The housebuilding industry that Stewart Baseley is attempting to defend, cannot even produce a home that is 100% finished by the date builders say it will be. There can be no excuses for handing over a defective, poor quality and often unfinished new home. Whilst it is true a new home is exposed to ‘all weathers’, but so are new hospitals, schools office blocks etc all built to much higher standards handed over 100% compete, on time, with very few (if any) defects. It is not impossible to build a perfect new home. All that is required is care, desire and sufficient time. The industry has lowered expectations, so buyers expect to have defects and faults. You do not expect to have faults in a new car. You don’t drive it for a week and then take it back to the dealer with a list of things that need sorting out!

But that doesn’t always happen people have to go through complaints procedures etc
“Well I accept that and Oliver Colvile talks about an ombudsman and we already have procedures in place. If you have a warranty like the NHBC or Premier or LABC there is a disputes resolution service, we set up a Consumer Code for Home Builder back in 2010 that also has a disputes resolution service for areas that are not covered by the warranty provider, and I’m a great believer in transparency and I’m a great believer in people having access to services that are cheap for them to use to get quick remedies to their problems.”

“We already have procedures in place”
Fact: Dispute resolution by warranty providers, that are funded by housebuilders, to adjudicate on disputes with those very housebuilders about their reluctance to fullfil their obligations under the warranty policy!

“The NHBC Dispute Resolution Service can help with help to settle disputes over defects which relate to the NHBC standards. The NHBC standards require builders to fulfil all of their obligations under the Buildmark policy.”
The fact is house builders don’t and the NHBC has to mediate in disputes, which they find in favour of homebuyers in around 70% of disputes.

The Warranty dispute resolution cannot help with non-warranty matters, such as disputes over boundaries, planning, contractual or financial matters or if arbitration or legal proceedings against the builder have started.

“we set up a Consumer Code for Home Builder back in 2010 that also has a disputes resolution service for areas that are not covered by the warranty provider”
Fact: Unsurprisingly the HBF “sits on the Code advisory forum to ensure house builder’s interests are represented….to ensure that any changes are workable for the industry”  

The new revised Consumer Code for Home Builders comes into effect 1 April 2017. I believe the revisions to the Code are further to the detriment of the homebuyer. They have been made following decisions in cases of claims made by new homebuyers. These include the abolition of the ability to claim £250 for inconvenience, the removal of the requirement to give a copy of the Code to anyone that asks and non-provision the “home builder guidance” – so much for transparency Mr Baseley! Furthermore, in the case summaries since the Code was introduced in April 2010, there have been a total of 193 cases to June 2016. Out of these, 56% that succeeded or succeeded ‘in part’ resulted in total awards of just £221,869, just 19% of the total claimed £1,150,755.

Stewart Baseley says: “I’m a great believer in transparency”
Fact: The Customer Satisfaction Survey and builder star rating for example has no access to NHBC survey portal so buyers can see survey responses and builder scores in real time, [as house builders can] just the industry adjusted results in March. The HBF should publish all builder scores not just the Q1 star rating score. Why do they not publish the NHBC 6-month survey results? The NHBC could publish details on how many claims for each builder and how many disputes for each builder go through the resolution process.

The NHBC should publish details on the number of warranty claims for each builder and how many disputes for each builder go through their resolution process. The Consumer Code for Home Builders should not be confidential. The CCHB should publish the names of housebuilders in case summaries along with what sanctions (if any!) have been made to the housebuilder. 

Fact: The LABC and Premier Guarantee warranties are administered by MD Insurance Services. The Dispute Resolution Service Team is supported by Claim Investigation Surveyors; Premier Guarantee Surveyors is the trading name of MD Warranty Support Services Limited. The NHBC has entered into a joint venture with MD Insurance Services Limited under the name of the Consumer Code for Home Builders Limited (CCHB). The CCHB operates a code providing protection and rights to purchasers of new homes. Ian Davis, Executive Director of NHBC, is a Director of the CCHB. The NHBC paid the Code £235,000 in 2016 and £175,000 in 2015.

The use of ‘Gagging Orders’ isn’t transparency!
Fact: The NHBC and housebuilders use of ‘Non Disclosure Agreements’ also known as “gagging orders” is hardly “transparent” and used for no other reason but to conceal the extent of defects in homes built by housebuilders and the amount of compensation paid. The NHBC also use them when settling warranty claims, especially when further claims might result on particular developments such as weak mix mortar.

“We do not want to increase quantity at the expense of quality”
In order to do this, new homes would need to be being built to a certain higher quality to begin with. Does Stewart Baseley really mean that “we [his house builder members] must be careful not to build homes with even more defects as they slash them up to increase the quantity the government is asking us for?”

It’s time that Stewart Baseley, the industry (NHBC, HBF, house builders) and government came clean, admitted that there is a problem with both the poor quality of new homes being built and the poor service customers receive from indifferent house builders and implement the ten recommendations of the APPG Inquiry Report starting with setting up an independent, government-appointed, New Homes Ombudsman. Anything less is unacceptable.

I am grateful to Mary Glindon MP for asking housing minister Gavin Barwell the question on Monday 27 February 2017:
The current system is clearly inadequate
A Bovis buyer said:

“we took the decision to take Bovis to court last year – but our contract doesn’tt allow it unless NHBC resolution process has been activated and failed – it has been 7 months since we got NHBC involved and they have played us as much as Bovis – the result is always the same nothing happens.”

We are currently waiting for NHBC to start the agreed work – we had to complain to the financial services ombudsman who upheld our complaint to get some action from NHBC, but it is over 18 months since we complained to NHBC and work has still not started. Once the work has completed we will then pursue Bovis for breach of contract and compensation. We have legal expenses cover on our home insurance so can use that if needed”

A Wainhomes buyer told me:

“it is stunning how little comeback you have, the whole system is massively skewed in the developers favour and they know that and completely abuse it. NHBC is just a method by which they give some apparent credibility and peace of mind to their victims, it’s virtually worthless and also crucially means they don’t need to answer to local authority Building Control. It’s akin to fraud/organised crime, yet you have less protection than when you buy a loaf of bread.”

BBC Radio 4 Today said they asked the big companies if they wanted to take part in the programme – none of them did. But Bovis wanted to apologise and said:
“in some recent cases we haven’t met our customers’ expectations for which we apologise”

Taylor Wimpey PR statement:

“We sincerely regret that some of their customers have experienced issues with their homes at London Park and they apologised for the disruption this has caused. They say they are working with those affected customers and said they would like to re assure them that they are fully focused on completing their programme of remedial works as soon as possible.”

“We are sorry  ….    we are working with those…” blah blah blah!  In one case they have been “fully-focused” on one particular house at Loddon Park for over two and a half years!  Stewart Baseley and his builder members have their work cut out! The poor build quality of new homes cannot be dismissed like this.

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Fitting carbon monoxide alarms in new homes should be mandatory

Carbon Monoxide Alarms

The fitting of carbon monoxide alarms in new homes should be a mandatory requirement of the Building Regulations in England and Wales.  It may come as a surprise to learn that every year over 4,000 people are admitted to hospital with carbon monoxide poisoning that could lead to brain damage and strokes – with 40 fatalities recorded in England and Wales. One in nine British homes have boilers classified as unsafe.

The new home defect that kills

You can’t see it, you can’t smell it. Carbon Monoxide – the new home defect that kills!

In Scotland and Northern Ireland, the equivalent to the building regulations, requires a BS EN 50291 kite-marked carbon monoxide alarm to be fitted when any new or replacement fuel appliance is installed (except cookers). This covers any fuel burning appliance, including those that burn gas, oil, coal and wood. The alarms must be fitted in any room with the appliance or if it is an enclosed boiler, just outside the enclosure and any room that has a flue running through it. Alarms can be mains or battery powered but if the alarm is battery powered then the battery should last for the life of the alarm.

No requirement in England and Wales:
But the Building Regulations for England and Wales, Approved Document J, only require carbon monoxide alarms to be fitted when any new or replacement solid-fuel appliance is installed. Examples of solid fuel burning appliances being wood burners, open fires etc. There is also additional legislation requiring a carbon monoxide alarms to be fitted in all rented residential accommodation with gas appliances, but not in owner-occupied homes.

Around 84% of UK homes now have smoke detectors but only around 15% have carbon monoxide alarms, putting countless families in danger. Fitting carbon monoxide alarms could save many lives. But currently there are no regulations that require the fitting of carbon monoxide alarms in new homes with gas boilers installed.

Following on from my article Is your new home killing you? about instances of carbon monoxide poisoning in newly built homes leaking from gas boilers, I asked the NHBC – given the industry’s chequered history of carbon monoxide leaking from gas boilers/boiler flues installed in the homes under its warranty – if it thought that a carbon monoxide alarm should be fitted in every new home with a gas appliance? If so, why hasn’t the NHBC included this as a requirement in the latest 2017 Warranty Standards?  I was quite shocked by the reply:

“Thank you for your email to our Chairman; she has asked me to respond. As you may be aware, issues of health and safety are dealt with through statutory Building Regulations, which are set by government. Approved Document J ‘Combustion appliances and fuel storage systems’ does ask for a carbon dioxide alarm to be provided where a solid fuel appliance is located but there is currently no similar requirement in the case of gas appliances.

I would therefore suggest that you may wish address your enquiry to government department responsible for Building Regulations – the Department for Communities and Local Government.

The Head of Technical Policy at the Building Regulation and Standards Division is Richard Harral and his email address is: richard.harral@communities.gsi.gov.uk.”

So I duly contacted Mr Harral at the DCLG on 1st February and received his reply, 12 days later, confirming that he had “passed this on to the policy lead who oversees Building Regulations requirements for Carbon Monoxide alarms. He will provide a response in due course.” Mr Harral also pointed out that “responsibility for Building Regulations in Wales is now the responsibility of the Welsh Government.”

I had previously e mailed communities secretary Sajid Javid and housing minister Gavin Barwell regarding ongoing instances of dangerous gas boilers in new homes. This was the response from the DCLG:

“Thank you for your email of 17 January 2017 to Sajid Javid and Gavin Barwell, raising concerns about the quality of new homes. I have been asked to reply on their behalf.

In relation to the concerns you have raised about dangerous boilers. All heat producing gas appliances and their flues must be installed by installers registered with Gas Safe Register, a statutory registration scheme under the Gas Safety (Installation and Use) Regulations 1998. The enforcing authority for these regulations is the Health and Safety Executive and complaints about installations that are considered unsafe should be made to it.

There is a requirement that the installation of gas appliances be self-certified as compliant. However, these certificates are evidence, but not conclusive evidence, of compliance. This means that building control bodies could take formal enforcement action where work was found not to comply despite a self-certificate having been given. It also means that the building owner would be able to make a claim in the civil courts.”

So basically no requirement is considered necessary by the standards setting authorities or the government. Furthermore, formal enforcement action is not required and would not be taken by anyone, until it became known a boiler was leaking carbon monoxide, by which time it could be fatal and too late. Quiet how the “building owner would be able to make a claim in the civil courts”  I don’t know, they could be dead!

Although not a new-build home, 31 year-old Katie Haines was killed by carbon monoxide in her cottage shortly after returning from her honeymoon in February 2010. The Katie Haines Memorial Trust, set up a petition to lobby the Government to make CO alarms compulsory across the UK, in a similar way to smoke alarms.  It closed on 30 March 2015 and attracted 5,321 signatures, not enough to trigger the government into action.

Her mother said at the time:
“Two young men died in Northern Ireland the same year as Katie and legislation both on council and government level has been pushed through quickly. We feel that we should have the same duty of care in England and Wales.”

Carbon Monoxide AlarmsBut seven years later, there is still no legislation in England and Wales for mandatory fitting of carbon monoxide alarms in new homes where gas appliances are installed, yet there is in Northern Ireland and Scotland!

Despite the lack of any mandatory regulations requiring carbon monoxide alarms to be fitted in all new homes with gas boilers, the three largest housebuilders have all confirmed to me that they now fit carbon monoxide alarms “as standard” in every new home with a gas appliance.

Persimmon homes said:
“It has been Persimmon Homes’ group policy since September 2012 to fit a carbon monoxide detector/alarm to all properties with a gas fired appliance of any type. Current models include the CO-9BT or similar approved models.”Carbon Monoxide AlarmsTaylor Wimpey said

“Thank you for your email, the contents of which are noted and which relates to a matter which we take very seriously.

We are aware of the tragedy that you refer to in your email, which took place at the Barratt Bedfont Lakes development in 2008.

Following a detailed review that we undertook in and around 2011, since 2012 (when we also commenced the phasing out the use of extended gas flues) we have required all of our business units to fit CO monitors in all homes with gas appliances. Our policy is to fit CO monitors in all rooms where a gas appliance is fitted – in some homes, this could involve the fitting of multiple monitors including in rooms with a gas boiler, gas hob or gas fire/s. There is further instruction issued on how that is done, and the positions of the monitors is shown on the house type drawings and customer drawings which the sales executive will run through with our customers.

Please find attached an information leaflet on the Honeywell XC100, which is the monitor that we currently fit. In 2012, we also undertook an exercise of raising the profile of the risks of CO to both customers and homeowners and this included making available free CO monitors retrospectively.”

Barratt confirmed bluntly:
“Yes, we fit CO detectors to all houses and apartments which have a gas boiler.”

But do they? I asked new home buyers in the Unhappy New Home Buyers Facebook Group if they had Carbon Monoxide alarms fitted in homes built by these builders:

Two Barratt new homebuyers responded, one said they had, the other said : “when we moved in in June 2011, we didn’t have one even though it was listed on the specification. It took the Customer Services Manager multiple attempts to deliver one….. we now have a couple of spare central heating control units which he delivered by mistake…”

The few Taylor Wimpey buyers who did respond, all confirmed they had a CO alarms fitted.

Carbon Monoxide The Persimmon homebuyers that responded, overwhelmingly that demonstrated that many Persimmon homes would appear not to have CO alarms fitted, despite the company confirming it was “group policy since September 2012 to fit a carbon monoxide detector/alarm to all properties with a gas fired appliance of any type.”

All twelve Persimmon buyers who responded, confirmed they didn’t have a carbon monoxide alarm fitted: six bought in 2015, two in 2014, two in 2013 and one in 2012. Another buyer said his whole street haven’t a CO alarm fitted!

When I notified Persimmon of this they said:
If you can supply me with the names, addresses and phone numbers of each of the people I’ll gladly get in touch with them.”

It should also be noted that these are battery sealed-for-life CO alarms and need to be replaced every 7 to 10 years.

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Carbon Monoxide Poisoning Risk In New Homes

Is your new home killing you?

Killer new homes - carbon monoxide poisoningThe shocking truth is, any new home built since 2000 that has a gas central heating boiler could be lethal. There is now widespread recognition that systems with concealed twin extended boiler flues, pose a significant risk of carbon monoxide poisoning. I am calling for a mandatory requirement that all new homes must be fitted with carbon monoxide alarms.  In addition, every new home must be independently inspected, not merely ‘signed off’ and certificated  by the installer.

Carbon monoxide poisoning kills

14 November 2007
Maria Ighodalo (28) dies from carbon monoxide poisoning
London and Quadrant housing association tenant, Maria Ighodalo, died in a block of flats, known as ‘Beulah Hill’, in Upper Norwood from carbon monoxide poisoning. The flat had a gas safety certificate and a concealed flue heating system.

27 February 2008
Elouise Littlewood (26) dies from carbon monoxide poisoning
You would think that following the tragic death of 26 year-old dance teacher Elouise Littlewood on 27 February 2008, who died from carbon monoxide poisoning from a faulty boiler installation in her flat on the Barratt development at ‘Bedfont Lakes’ in Notting Hill West London, that all house builders would be double checking every boiler in every new home they build, to ensure they are 100% safe and installed to manufacturer’s and GasSafe instructions.  Elouise bought the two-bedroom property through a shared ownership scheme with Notting Hill Housing confirming: “Barratt had installed the gas system and produced a gas safety certificate with a one-year guarantee.”

Prosecutions over inadequately installed concealed boiler flues
After separate investigations by the Met Police and the Health and Safety Executive, the gas fitter accused of her manslaughter, Paul Williamson (53) from Sutton, was cleared of manslaughter by gross negligence by an Old Bailey jury in June 2012. His employer, Malden Plumbing and Heating Limited, was also cleared of failing in its duty to protect non-employees from risk.carbon monoxide alarm Following the Bedfont Lakes tragedy, which also left Her lodger, Simon Kilby, with permanent brain damage, the Health and Safety Executive warned that 1,200 homes with concealed flue boiler systems could be ‘immediately dangerous’ with a further 4,800 a potentially ‘at risk’. The figures were based on exploratory work carried out by Barratt and other developers. Carbon Monoxide [CO] is a colourless, odourless, tasteless, poisonous gas produced by incomplete combustion of carbon-based fuels. It stops the blood from bringing oxygen to cells, tissues, and organs and can kill quickly, without warning.

28 May 2008
No Commissioning certificate for boiler in Persimmon new home
A few days after Lisa Peplow and her family moved into their brand new home she discovered the boiler installed by Persimmon Homes, could have leaked potentially fatal carbon monoxide fumes after calling an emergency plumber when the boiler stopped working and produced a “funny smell.”

The plumber told her that the boiler at her house in Shackleton Close, Bowerhill, near Melksham, did not even have a commissioning certificate – a legal requirement. She told This is Wiltshire:
“He came out, disconnected it and condemned the installation saying it was illegal. I had three things wrong with the boiler last year and he said if I hadn’t had them repaired there would have been a carbon monoxide leak. I was horrified; I was really shaken because I’ve got two girls here. Especially by the fact that carbon monoxide could have leaked out because of the installation.”

The plumber found part of her boiler had melted, giving rise to the strange smell.

25 September 2008
Gas safety checks at 319 new Barratt homes
The gas central heating systems in 269 homes in Colchester built by Barratt Developments underwent safety checks after concern was raised about the standard of their installation, with condensation stains spotted on a ceiling indicating evidence that a twin-pipe flue was leaking. The UK’s largest housebuilder said occupants could be at risk of carbon monoxide poisoning because of problems with flue installations. Another 50 apartments on a Barratt development in Leeds were notified of similar problems. Residents were told to contact British Gas to safety-check their systems; with others having the gas supply to their homes switched off to ensure their safety. The Barratt spokesman saying at the time:
“After detailed discussions with the Health and Safety Executive, as a precautionary measure we have engaged British Gas to conduct quality assurance checks at a limited number of housing developments where a central heating system may have been installed.

31 January 2009
Gas supplies turned off in 340 Taylor Wimpey new homes
A Taylor Wimpey development of 340 homes at ‘Harbour Reach’ in Poole had their gas supplies turned off after a leak of a potentially fatal carbon monoxide was discovered, detected by a carbon monoxide detector, fitted in all homes owned by Raglan and Swaythling Housing Associations. One resident Chris Walsh, who had moved in over a year earlier, said at the time:
“We’ve been told there are serious problems with the boiler flues and levels of carbon monoxide, it’s a silent killer. When you buy a new property you get a [gas] certificate that the property has been tested and complies. How can that be allowed to have happened?”  

2 December 2010
HSE issued a safety bulletin which was updated on 20 May 2013
It is a requirement under The Gas Safety (Installation and Use) Regulations 1998 for a service engineer working on a boiler, to check the flue for correct operation. This cannot be done where the flue has been installed within the fabric of the building with no access. The most commonly installed boilers that could have been fitted with extended concealed flues are: Range Powermax, Potterton Powermax, Gledhill Gulfstream, Ideal iStor.

Even if there has not been a carbon monoxide leak in a home, engineers might discover that the flue pipes were not connected as securely as they should have been presenting an ongoing risk to the occupants if left unresolved. All homeowners especially those that have bought a new home are advised to fit a carbon monoxide detector. These can be bought for as little as £7 to £25 and could save you and your children’s lives!

9 July 2012
Couple poisoned by carbon monoxide for five years in Taylor Wimpey home
Doreen and Gerald Lee were exposed to carbon monoxide for five years because of a faulty boiler flue. They claimed housebuilder Taylor Wimpey had put their lives at risk after discovering that levels of deadly carbon monoxide in their ‘Winthorpe Gardens’ home in Borehamwood were “through the roof.” Their home had been built by Taylor Wimpey five years earlier, but a “wrongly installed” boiler flue only came to light when the property was checked five years later. Flats in another Taylor Wimpey development, ‘Keble Court’, next to Winthorpe Gardens, were evacuated on 14 July 2012 after more concerns about carbon monoxide leaks.

Six months earlier, Taylor Wimpey were forced to take action on another of their developments, the 791 home Grand Union Village, in Ealing and Hillingdon after elevated levels of carbon monoxide were discovered at an apartment in December 2011.

Taylor Wimpey inspect 9,000 homes in 4 years
Taylor WimpeyIn total, Taylor Wimpey had conducted inspections on more than 9,000 of its new homes in the four years to October 2012. It has even inspected homes that did not have extended concealed flues. Taylor Wimpey told Inside Housing:
“We have also identified that only a very small proportion of homeowners are having their gas boilers inspected and serviced regularly. In light of the concern that many customers are not having gas appliances inspected or serviced regularly, we have now amended our standard specification to include the installation of an audible carbon monoxide alarm in any room which contains a gas appliance.”

Taylor Wimpey wrote to all of its customers who bought homes completed from 2000 – when concealed extended flues were commonly used, highlighting the risks of carbon monoxide poisoning, emphasizing the importance of regular boiler servicing and offered to supply free carbon monoxide alarms. As of October 2012, Taylor Wimpey had written to a staggering 150,000 customers about the issue and says it has installed or supplied more than 30,000 audible carbon monoxide alarms since 2009 following the HSE safety bulletin in December 2010.

Persimmon, Britain’s second largest housebuilder by volume, whilst refusing to comment on whether it had found problems in any of its homes and whether it had taken steps to protect residents in homes with concealed flues, it did tell Inside Housing in October 2009 that it had found 384 properties that “did not have access panels in accordance with the safety requirements”. It had undertaken to complete work on these by December 2009.

March 2014
At risk notice on Barratt boiler after Ideal sent engineer to fix it
As John Gosling writes in his excellent blog ‘A Barratt Home From Hell’ that the Ideal engineer pointed to the air inlet on the outside wall explaining that because of the way it had been fitted, the boiler was receiving insufficient air and would not be running efficiently. After John called the HSE Barratt quickly fixed the problem.

23 November 2015
Home built in 2006 had unsealed flue
An inspector found a fault with the boiler of a home built by Roland Bardsley Homes in 2006. The company being acquired by David Wilson Homes in 2006. Louise Dunn, from Shaw near Oldham, suffered symptoms of carbon monoxide poisoning in November 2015.  It was discovered that the flue, designed to take carbon monoxide away from the home, was left unsealed, meaning the toxic gas could leak back into the house.

December 2016
Taylor Wimpey still apparently have issues on their developments around the UK with boilers.

A Taylor Wimpey homebuyer recently posted on the forum :

“We have an ongoing issue with Taylor Wimpey. An insurance-appointed engineer shit down out boiler because it was “dangerously unsafe” He found that the flue to our boiler was incorrectly fitted at installation because flue lengths were cut too short, damaged elbow and missing seals. A second engineer second engineer of my choice, attended [on 11 January 2016] and pretty much reached the same conclusions Taylor Wimpey have sent their own independent engineer but they are refusing to share their findings (which I’m not surprised at). Carbon monoxide has been leaking into our home, which explains why I get headaches and nauseous when working at home. Fortunately, we have a three-storey townhouse and neither of us spend that much time on the top floor. We’ve been without running hot water and heating since 30th December 2016 because the engineer shut down our boiler on the grounds that it was dangerously unsafe.

 “I’ve since learned that Taylor Wimpey have had issues on other developments around the UK with boilers and subsequent carbon monoxide emissions. Indeed, on our development a string of boiler failures prompted Taylor Wimpey to install carbon monoxide alarm monitors on every home on site (almost 300). About four years ago, a row of houses on our development had some pretty serious boiler issues. After the remedial works were completed, Taylor Wimpey then sent ‘engineers’ to every home and installed CO [Carbon Monoxide] monitors outside every boiler cupboard and allegedly checked every flue. They fitted three brackets to ours, one in the boiler cupboard and two on the main body of the flue in the loft.”

I can’t begin to list the number of issues other new homebuyers have told me about. Most concern boilers found to be “wired incorrectly” after the first annual service was carried out. This forum post concerning Charles Church homes  being typical.

Independent inspections of Gas and Electrical installations

At the APPG Inquiry Into the Quality of New Homes in November 2015 I made a submission/presentation and said that there should be:
“Independent Electrical and Gas installation inspections. Electrical and gas safety inspections must be carried out by an outside inspector rather than the current self-certification by the individual or installing contractor.”

I have asked government for this measure to be considered for inclusion in the Housing White Paper (along with the New Homes Ombudsman) as people’s lives are being put at risk and certain house builders retrospectively fitting carbon monoxide alarms is not a solution to the leaking, potentially lethal, boiler flues and incorrectly installed gas boilers.

As a minimum, it is essential to make fitting carbon monoxide detectors in all new homes a mandatory Building Regulations requirement and NHBC warranty standard. As it stands, there is no legal requirement for builder, landlords or gas companies in England and Wales to install alarms where there are only gas appliances. There is a duty under the Building Regulations Part J from 1 October 2010, when a solid fuel or bio fuel heating system is installed, such as a wood burning stove.

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Commons Debate Leasehold New Houses Scandal

“The PPI of the house building Industry”

The APPG for Leasehold and Commonhold Reform managed to secure a debate in the commons chamber on Tuesday 20th December 2016 to discuss the leasehold new houses scandal. With 53 APPG members, it was surprising that only 13 MPs and Housing Minister Gavin Barwell attended initially. I previously highlighted the scandal of leasehold new houses on 7 November 2016 entitled “The next mis-selling scandal” This phrase apparently being picked up, with the Labour MP for Ellesmere Port and Neston, Justin Madders calling the practice during the debate as “the PPI of the house building Industry”. See also Never buy a leasehold new house 28 October 2016

leasehold new houses scandal

Leasehold new houses scandal

LeaseholdAn analysis by the excellent campaign group  Leasehold Knowledge Partnership (LKP) in November 2016, revealed that 8,775 new-build leasehold houses totalling nearly £2billion were sold in England and Wales last year. In all around 45,000 new houses have been registered as leasehold. Many of these bought with help from taxpayers’ through the Help to Buy scheme. In most cases, the housebuilder sells the freehold after a couple of years to a private company, which can then demand extortionate fees from homebuyers.

The LKP say that housebuilders are collectively making an extra £300-£500 million a year from selling new homes as leasehold and then selling freeholds to third parties. The only conceivable reason is to produce an income stream, whilst not illegal, it’s not morally right. The Sunday Times recently reported that over the last two years, Berkeley Group has made a £136million profit selling ground rents that generate £153million a year. In their 2015 annual report Berkeley stated During the year, the Group sold a portfolio of ground rent assets at a gross profit of £85.1 million.” In their 2016 annual accounts, Barratt Developments declared an income of £51.6 million (£34.7 million in 2015) under “other income … which principally comprises the sale of freehold reversions, ground rents, property management income and management fees receivable from joint ventures”.

On 13 September 2015 the LKP said:

“politicians supposedly concerned with issues of leasehold should be questioning this matter. Indeed Persimmon should be under further scrutiny for holding its freeholds in offshore companies – the easier to flog off to anonymous entities and avoid the leaseholders’ right of first refusal. Jeffrey Fairburn, CEO of Persimmon, says he wants to engage with ‘stakeholders’, but is less enthusiastic to explain why he is building leasehold houses around the country”

Following pressure from MPs and the LKP Taylor Wimpey has undertaken to cease building and selling leasehold new houses from 1 January 2017. The government said it will scrutinise the enthusiastic monetisation of leasehold by other housebuilders in the New Year, including Bellway, Redrow and Persimmon, whose leasehold houses are built and offered for sale nationally.

Some housebuilders have been selling leasehold houses since 2007. Housing minister Gavin Barwell confirmed that 43% of all new build registrations in England and Wales in 2016 were leasehold.”

According to a survey by LKP of 105 leaseholders with onerous ground rents: 58% bought their properties using the solicitors recommended by the housebuilder. When asked whether the solicitors highlighted or indicated the ground rent terms, most replied “no”. All respondents claim solicitors did not inform them that the ground rent terms could affect resale values, as legal practitioners are obliged to do. 25% bought through the taxpayer-backed Help to Buy scheme.”

MP’s debate the leasehold new houses scandal

For the full Hansard transcript of the debate click

Sir Peter Bottomley comprehensively exposed the abuses and he named names. He said this “goes beyond sleaze”. A CBRE report stated that some people who are developing property with leaseholds are now selling the freehold in advance so that they escape the responsibility of offering it to the leaseholders after two years. He said: “I own some shares in Persimmon and some in Taylor Wimpey, and I might buy some shares in other builders. If necessary, I shall go to their AGMs, giving notice in advance, to ask what they will do to unwind the problems that they created in the past.”

The leasehold new houses scandal
Justin Madders
Labour MP for Ellesmere Port and Neston

“This is nothing short of a national scandal. It is the  PPI of the house building industry.

Thousands of people around the country who bought new homes in good faith are the victims of what can only be described as a racket by some of the country’s best-known developers, who between them have received millions of pounds from taxpayers to provide affordable homes and have also been the recipients of generous subsidies as a result of policies such as the Help to Buy scheme.

When people buy their home, they like to know who they are buying it from, but leaseholds are often sold on to third parties who can then vary the agreed terms of the leasehold, at which point—this is a scandal—developers claim that it is no longer anything to do with them

The prices quoted [for buying the freehold] can vary significantly for almost identical properties, suggests that the buy-out costs are calculated on nothing more than what the investors think they can get away with.

One constituent received advice from solicitors who were recommended to her by Taylor Wimpey, and she felt under some pressure to appoint them. She was advised that the lease did not impose an unduly onerous or prejudicial burden. This was for a leasehold Taylor Wimpey house with a ground rent that doubled every ten years.

It is a cynical business decision, which will in the long run damage the reputation of those involved.

It is also disappointing that the newest development in my constituency, currently being constructed by Redrow Homes, is also being sold on a leasehold basis. Redrow tells me that this fact is made known to purchasers before they reserve their property, although I note that on its website the promotion of that particular development makes no mention of that. What is particularly disappointing is that Redrow, despite my asking twice why it feels the need to sell large detached family homes on a leasehold basis, offers no justification whatsoever.”

“Does he [Housing Minister Gavin Barwell] agree that developers should be prohibited from recommending a particular solicitor to purchasers because of the clear potential for a conflict of interest and the clear failure, as we have seen here, to provide the best advice?”

“Will the Minister consider withdrawing and recouping taxpayer subsidies to any development found to be ripping off householders in this way?”

I am sure Oliver Colville will recall my presentation to the APPG Inquiry Into the Quality of New Homes, when I called for an “end state funding and government help for failing and indifferent housebuilders.” I am not sure how this funding can be retrospectively “recouped” from particular housebuilders, but Help to Buy and other schemes are no longer necessary as low-rate mortgages are now freely available. I also suggested that No housebuilder should be allowed to encourage their buyer to use any particular firm of solicitors or mortgage broker.” Now MPs can see the damage that housebuilder suggested/recommended solicitors does and how this clear conflict of interest adversely affects and disadvantages new homebuyers.

Oliver Colville said that housebuilders are selling the freeholds in advance so they do not have to be offered to new home leaseholders.

Housing Minister Gavin Barwell said that he acknowledges that many of the examples raised by MPs in the debate are not exceptions and that there are widespread problems that need addressing. He said:

“Analysis by LKP suggests that nearly 9,000 houses were built and sold last year as leasehold. Some have no shared services or estate management functions. In fact, they seem to exist only to create a reliable income stream from the ground rent, permissions to alter the property, and selling on the freehold at some point in the future. Developers can maximise their return by selling the freehold interest to the leaseholder at a higher value after they have moved in, or by selling it to a third party without informing the leaseholder. That is a critical point: if a freeholder wishes to sell a leasehold flat, the leaseholder has the right of first refusal, but that right does not extend to those in leasehold houses. The Secretary of State [Sajid Javid] and I have been looking closely at the issues raised in recent weeks and we are both absolutely determined to stamp out unfair, unjust and unacceptable abuse of the leasehold system.

We should not be under any illusions. The problem does not just concern one company; a number of our larger developers are involved in it. They would do well to remember that they are building homes for people to live in, not investment vehicles for financial institutions. Except in a very few exceptional circumstances, I cannot think of any good reason for houses to be built on a leasehold basis. If the industry does not put a stop to the practice and help existing homeowners, we will look to see what Government can do.

Both this House and the Government want to hear more from the developers about what they are going to do to put the situation right.

The motion states that the House “has considered” this issue, and I want to reassure my honourable Friend that it will be considered by the Government and that we will come back in the New Year with proposals about how to tackle it.”

Quite frankly, the housing minister should be telling the housebuilders what they must do, not asking them for their proposals to end this leasehold new houses scandal. After all, it is the lack of any law prohibiting this that has enabled the housebuilders to get away with this practice for nearly ten years, yet only now is government recognising the problem.

On 5th October 2016 Prime Minister Theresa May told the Conservative Party Conference that she was about:

“Righting Wrongs : Challenging vested interests : Taking big decisions : Doing what we believe to be right : Getting the job done : That’s the good that Government can do and that’s what I’m in this for : Standing up for the weak, standing up to the strong.”

“Standing up” to housebuilders and “righting wrongs”. Banning the sale of leasehold new houses and ending Help to Buy on 1st January 2017,  making it illegal for housebuilders to nominate, suggest, recommend or offer homebuyers cash inducements to use a preferred firm of solicitors and setting up a New Homes Ombudsman would be a good place to start Mrs May!

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Leasehold new houses – the next mis-selling scandal?

Caught in a trap – Leasehold new houses

Given the information, no new homebuyer would ever choose to buy a house with a leasehold title. Perhaps this is why some housebuilders hide this extremely important information from new homebuyers. Even if they do think to ask about the property title, it’s no good saying “People are scared of change because it’s something new. But it’s virtually freehold.” As a Persimmon sales advisor told a reporter from The Guardian.

leasehold new houses

Is it Freehold? New homebuyers are getting caught out by newly-built leasehold houses.

Justin Madders MP for Ellesmere Port and Neston, is calling for a ban on leasehold new houses:

“It is clear this system is being abused to drive huge profits at ordinary ­homeowners’ expense. There is no need for there to be leasehold properties, particularly those on an estate where the properties are mainly detached houses.

“They need to be banned – it may be a convenient way for developers to get extra profit from their building work, but once they get in the hands of these private equity companies the profit motive overrides any considerations that there are real people living in their homes, who are being asked to stump up eye-watering sums.”

As Patrick Collinson reported in The Guardian on Saturday 29 October 2016, a new house built by Taylor Wimpey in Ellesmere Port was sold for £155,000 on a 999-year lease in 2009. Seven years later, the owner was quoted £32,000 to buy the freehold from E&J estates who had bought the freeholds from Taylor Wimpey. Another buyer was quoted up to £40,000 by E&J estates for the freehold of their 2011, 4-bedroom £122,000 house and despite a long lease, another new homebuyer in Manchester is was forced to pay £38,000 to buy the freehold on their recently built home.

Escalating ground rent is another issue. Taylor Wimpey set the ground rent at £295 a year on the Ellesmere Port development, with the contract stating that ground rent will double every ten years!

The Guardian reports:

“Like thousands of others in England and Wales, buyers have been trapped by a controversial trend among housebuilders to sell homes as leasehold when they previously would have been freehold. The buyers are given reassuringly long 999-year leases – but later find that buying the freehold is prohibitively expensive.”

Government figures show that around 6,000 new houses were sold as leasehold last year. Previously, houses on new-build developments were sold as freehold, but leasehold new houses are becoming more common with the likes of Persimmon, Taylor Wimpey and Bellway selling houses as leasehold on their developments. Indeed a third of new houses sold by Persimmon are leasehold, around 4,372 in 2015, nearly three-quarters of all new leasehold houses registered in 2015.

Justin Madders, MP for Ellesmere Port and Neston, whose constituency covers the Taylor Wimpey development says the situation is: “morally indefensible”. 

“I have had a number of constituents contact me, saying they were aware at the time of purchase that the freehold was extra. However, they didn’t know the original developer sold the leaseholds to private investors who have ruthlessly exploited the law to line their own pockets.

“The prices they have been quoted to buy the freehold have rocketed beyond any reasonable sum people can afford. I have found constituents are unable to afford the fees being quoted and there are extortionate charges associated with obtaining permission to alter the property. Just over £2,500 was quoted for permission just to build an extension.”

The Guardian said it is easy for buyers to miss the fact that the new property is leasehold. For example, at Persimmon’s Agusta Park development in Yeovil, Somerset comprising of 2, 3 and 4-bedroom homes, all are being sold leasehold. Yet The Guardian reported there was no mention that the houses are leasehold on either Persimmon’s website, or in the site brochure.

Asking about the lease, Guardian reporters were told it was 999 years and the ground rent was £150, then £190, and eventually that the ground rent would go up every 10 years using a formula linked to the RPI. The Persimmon sales advisor said:

“It’s a 1,000-year lease. If she lives to 100 there will still be another 900 years to go. It’s virtually freehold. Flats are always sold as leasehold. Lots of [house] developments are going this way now. People are scared of change because it’s something new. But it’s virtually freehold.”

And regarding buying the freehold?

“It’s not available at the outset, but can be bought within two years. I’ve no idea. We don’t quote on the price of the freehold.”

Potential buyers allege they are not told about the leasehold until late in the process.

One Guardian Money reader said: “We were about to purchase a new house when we noticed that part of the communal charge for the upkeep of open spaces was for ground rent.” alleging that at no stage was the word leasehold used by the salespeople, nor was it in any of the documentation they signed. The reader said they pulled out of the purchase of the Persimmon home after seeing stories of housebuilders charging large fees just to give permission to make alterations, such as installing a conservatory and tens of thousands of pounds to purchase the freehold.

Developers were asked why they are selling houses as leasehold?

Persimmon told the Guardian:

“Persimmon sells a mixture of both leasehold and ­freehold properties. As Persimmon has acquired other ­companies over the decades, it has inherited the freehold reversions of leasehold properties sold by those businesses. There are around three million leaseholders in Britain. All Persimmon leasehold houses carry an extremely long ­999-year lease and customers are informed at ­purchase what type of property they are buying.”

Persimmon refused to state the typical ground rents charged, how much the company makes from selling freeholds, or the fees charged to leaseholders for approval for alterations or things like building a conservatory.

Taylor Wimpey ­confirmed it had sold freeholds to E&J Estates, but did not disclose the price, and would not comment on the £32,000 E&J Estates wanted for a freehold. They told the Guardian:

“At Taylor Wimpey the vast majority of our houses are sold on a freehold basis. However, in a small number of developments, ­predominantly in regions of the ­country where it is common practice in the market, we sell houses on a leasehold basis. Throughout any sale process, customers are fully informed of the ownership structure of the home. If a customer is interested in such a property, the sales team advises them whether the property is being sold on a leasehold basis.”

­Issues concerning leasehold properties will be top of the agenda for the all-party parliamentary group on leasehold and commonhold next month. Chaired by Labour MP Jim Fitzpatrick and Tory Sir Peter ­Bottomley, has attracted 43 MPs and lords.

Sebastian O’Kelly of the Leasehold Knowledge Partnership – a support group set up to protect and campaign on behalf of ordinary leaseholders said:

“It is disgraceful that plc ­housebuilders are building leasehold houses that ­ordinarily – and until recently – would have had freehold title. This is an ­erosion of the wealth of ordinary people at the expense of the rich.

Young people, after years of paying rent, finally buy a home and then find they are still, in fact, tenants – which is what a leaseholder is – with all the ­vulnerability that that implies.

The housebuilders are evasive over this issue and it beggars belief that the ­outrageous ground rent multiples come from household-name builders. There is no attempt to justify the adoption of leasehold tenure for these houses, which are not complex communal sites such as blocks of flats.”

 

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The Redfern Review – How Is CEO Peter Redfern Doing At Taylor Wimpey?

peter-redfernIt has been over seven months since Taylor Wimpey released its results for the full year to 31 December 2015 (1 March 2016). This included a statement from Chief Executive Peter Redfern, which recognised improvement was needed with regard to his company’s poor customer satisfaction levels. Perhaps it is time to take stock and conduct our own ‘Redfern Review’.

Peter Redfern said:

“During 2015, we achieved a customer satisfaction score of 86% (2014: 87%). We are disappointed that this has slipped. Whilst we operate in a cyclical market, we strongly believe that a customer centric approach is needed throughout the cycle. During 2015 we completed an in-depth review of every aspect and stage of our Customer Journey, to identify areas of improvement and to deliver a better homebuying experience for our customers. Throughout the review, our focus has been on understanding our customers’ priorities to enable us to deliver at and ahead of expectations. We have also commenced the process of rolling out our new customer approach across the business with a focus on three main areas: our culture, management structure and process. This is to ensure that going forward we deliver the right product, supported by excellent customer service to all our customers at every stage of their journey with Taylor Wimpey.

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Defective Taylor Wimpey new home causes injury to 10-year-old girl

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.

Oliver Colvile MP

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.

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Builders shares crash as Britain votes to leave the EU

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.

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Quality compromised in rush to build new homes

At last! Peter Redfern admits quality is being compromised in the rush to build new homes

Pete RedfernTaylor 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.

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