Taylor Wimpey to pay £130m over scandal

BUILDER Taylor Wimpey today said it would pay out £130 million to help customers caught up in a scandal dubbed the “PPI of the housebuilding industry”.

Chief executive Pete Redfern said the move came after a storm of complaints when a number of homeowners realised their ground rent charges could double every 10 years (see box).

He said the controversial structure was introduced a decade ago “in good faith” and the doubling clauses are considered to be legal.

However, he added it was clear the impact “is now causing some of our customers understandable concern”.

Last year Labour MP Justin Madders said in a House of Commons debate the issue was “nothing short of a national scandal. It is the PPI of the housebuilding industry”. Madders welcomed the payout by Taylor Wimpey today.

Redfern added: “We acknowledge 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.”

Taylor Wimpey is negotiating with freeholders and has set aside £130 million which will be used to convert customers’ leases into those that are “materially less expensive”.

He said: “Today is about doing the right thing for our customers and, we believe, the right thing for investors.” Customers in the North-West and London were affected, although the company refused to comment on how

many were caught up in the scandal. A note from JPMorgan Cazenove said: “In the event that the group is not able to reach agreement with freeholders, Taylor Wimpey will pursue other avenues to help customers.

“We see limited, if any, scope for the cost of this exercise to escalate beyond the £130 million provided for.”

The group reported a good start to 2017, helped by strong customer demand and mortgage availability.

In the year to date its order book stood at 9219 homes, up from 8811 a year earlier. The shares rose 0.55p to 199.05p.

@es_jobourke