Barclays bank has refused to issue a mortgage on a development by Taylor Wimpey after discovering that buyers can be thrown out of their homes if the developer goes bust.
The mortgage lender said that it had found a problematic clause in the leasehold contract being issued to buyers of homes by the housebuilder and L&Q, the housing association, at a development in London.
The incident, revealed in the Financial Times, is likely to place fresh scrutiny on Taylor Wimpey over contracts drawn up by Britain’s third largest housebuilder. The developer had to set aside £130m last year to cover disputes with its customers over ground rent clauses.
A Taylor Wimpey spokesperson said: “We take any issues that may have the potential to impact the saleability or mortgageability of our customers’ homes extremely seriously and, on behalf of our customers, we looked into this matter as a priority to understand the facts and address any concerns.
“Individual leases with our customers do not contain any terms that trigger automatic forfeiture if the joint venture company becomes insolvent. There is a right to forfeiture by the head landlord but only in narrow circumstances, in which the head lease is disclaimed by a liquidator of the company and/or the Crown. This would therefore require a number of steps before the head lease could be forfeited, and there are no contractual terms in the plot lease that would automatically bring those leases to an end.
“However, while we believe the current lease complies with the CML guidelines and it is only one provider who has raised this as a potential issue, we will amend the clause so mortgage applications are not delayed. By way of further assurance, we will also work with Chobham Manor LLP to amend the leases for current residents so all leases are the same.”
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