Taylor Wimpey to pay £130m over ground rents scandal

One of Britain's largest housebuilders has apologised and announced it will offer £130m in compensation over a "ground rent scandal", says The Guardian.

The issue relates to contracts issued between 2007 and 2011 for leasehold properties, which included the provision for the rents paid to freeholders to double every ten years.

Leaseholders also complained that they were charged huge fees to undertake work on properties and that leases were being sold on to third parties.

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All in all the contracts are said to have made properties very difficult to sell and rendered "new-build leasehold properties… near-worthless", adds the Guardian.

Taylor Wimpey said in a statement at its AGM today that while the contracts were "legal" – and issued in "good faith", says the BBC – they are "not consistent with our high standards of customer service".

The company said it was "sorry for the unintended financial consequence and concern that they are causing".

Leasehold contracts are used for most flats and some houses. They involve homebuyers purchasing ownership of their property for a fixed period and subject to certain contractual obligations.

A freeholder ultimately owns the property and land, and is paid an annual "ground rent" by the leaseholder, as well as for specific rights such as building extensions.

"Other builders have also been criticised for drawing up similar contracts, but are yet to set aside compensation," says the BBC.