Nationwide is leading the charge against greedy developers and investors by potentially rendering thousands of new build houses and flats almost unsaleable. As of last week Nationwide will no longer lend or approve a loan on leasehold houses and flats where the ground rent is more than 0.1% of the value of the property and if the lease is less than 250 years for houses and 125 years for flats.
Developers will now be forced, if others lenders follow, to slash these medieval taxes on land rent or face a drastic reduction on the number of willing buyers. Nationwide, being one of the larger UK lenders will hopefully set a benchmark which will prompt other lenders to follow suit.
Taylor Wimpey offered £130 million last month to buyers trapped in new builds with spiralling ground rents which at first glance seemed to fix the problem but it is emerging that some will still be left with ‘obscene’ charges.
Jo Darbyshire of Bolton bought her house in Bolton in 2010 with a 999 year lease, which allowed the freeholder to double the rent every 10 years. She only found out the house she bought is now potentially unsaleable after a neighbours house sale fell through due to the lender rejecting the ground rent clause.
Jo made further inquiries only to find Taylor Wimpey had sold the freehold for £7,375 to Adriatic Land and that neighbours who wanted to buy the freehold to their houses were asked to pay £45,000 – £50,000 almost 25% of the value of some of the smaller houses on that estate.
This ground rent company also demands £100 from homeowners who ask for a quote to buy the freehold title as well as exorbitant fees ie. £3,000 to approve an extension before any work was initiated.
Taylor Wimpeys solution was to offer to change the lease terms to increase at the rate of RPI rather than doubling but it still leaves people at the mercy of greedy freehold owners. Jo Darbyshire goes on to say the only reasonable way forward is to offer the homebuyers the chance to buy the leasehold at the original price offered when the estate was built.