Retirement housing: dream or nightmare?

Retirement housing, also known as age-exclusive housing, is one of the fastest-growing property sectors in the country, and now that there are more over-65s than under 15s, it can only grow further.

These developments are heavily marketed with widely-advertised open days, seductive show homes, and ever-smiling sales reps.  They promise much: instead of rattling around in an otherwise empty and maybe falling apart family home, you can buy a brand-new flat in a landscaped, purpose-built development designed to cater for your every need. 

The developments offer both protection and independence. You have your own lockable front door and can come and go as you please, yet at the same time you are part of a community. There is a friendly manager on duty, and you have no need to fear a fall or sudden illness because all homes are fitted with a 24-hour panic button. And if you want guests to stay, you can simply book the separate guest suite. 

Sounds fantastic, doesn’t it? 

Unfortunately, as an increasing number of residents and their relatives are now discovering, specialised retirement housing often comes with very serious downsides.  For one thing, it doesn’t behave as other housing; all sorts of charges may be levied that you would never have to pay with an ordinary flat. And the biggest sting in the tail is that a percentage payment, known as a transfer charge, may be payable back to the developer on the sale of your home. 

For years, residents in retirement developments have accepted these elements as aspects of the ‘standard lease’ or contract they signed on buying the property, and they simply paid up. But now, a pressure group has been formed to challenge these charges, and the Office of Fair Trading is looking seriously into the matter. 

“We felt the matter of exit fees needed investigating,” said OFT spokesperson Frank Shepherd, “and we are of the opinion that they constitute an unfair and non-transparent contract.” In February 2010, the OFT obtained an undertaking from McCarthy and Stone, a major player, that they will remove exit fees from future and existing developments. But there remain many other companies in this sector, and they have so far not followed suit. 

Exit fees, however, are not the only problem. The whole sector urgently needs investigating and regulating, according to Melissa Briggs, co-founder of the newly-formed Campaign Against Retirement Leasehold Exploitation (CARLEX). She believes that many of the charges stem from pure greed and are nothing more than an easy way of exploiting a vulnerable group of people. “McCarthy and Stone, for instance, present themselves as ethical providers of the ‘happy, carefree retirement experience’ but once in, residents become confused and frightened by all the extra charges,” she says. 

“You buy into a dream and all too soon it becomes a nightmare as you are forced into paying charges you don’t understand and which are never part of an ordinary lease.  Exit fees, at between one and five per cent of the sale price, are something invented by the developers, and are not part of normal leasehold practice.  No service whatever is provided for this fee.

“Then there is often collusion between insurers, brokers and managers to inflate premiums and commissions. There is rarely any competitive tendering for building and other maintenance contracts, and these are often awarded to subsidiaries of the developers.  Developers frequently use their own managing company and so again, this is not put out to competitive tender.  Plus, it allows oppressive treatment of elderly tenants. 

“Residents may have to pay extra, on top of their service charges, to have a light socket moved, to park their car in the car park and to bring a mobility aid into the building.  Peverel, one of the biggest operators in the business, also instructs their House Managers to remove any information on notice boards which may be critical of the company. To us, this is censorship of the worst Soviet Union type.

“Although there are a number of companies in this highly profitable housing sector, they all operate a cartel so that there is no real choice, and they are all in collusion with each other. Elderly residents are kept in the dark about what really goes on, and we are exposing and bringing it to light, with the aim of bringing retirement housing in line with other leasehold properties.

“We are also campaigning for full refunds where charges have been imposed that leaseholders, in their ignorance and fear, have simply accepted. Although retirement properties are easier to manage than others, having few neighbour disputes, no mortgage defaulters, few arrears and quiet, compliant owners, service charges are always significantly higher, and can be as high as £700 a month.  High charges and non-competitive tendering are really a licence to print money.

“Before long, millions of us will be in retirement housing and as a matter of extreme urgency there should be a properly-funded regulator with prosecutory powers to enforce a strong code of conduct. At the moment, because of the high and ever-rising charges and exit fees, these properties are very difficult to resell. And charges keep adding up on unsold flats.”

Sidebar One:

What you may have to pay extra for:

Using a car park space, as a yearly rental of up to £250;
Covering rent, utilities, telephone charges, etc, on the House Manager’s flat;
A transfer fee on sale;
Services you simply don’t get such as window cleaning;
Non-competitive buildings insurance and building contracts;
A ‘permission’ charge to make small alterations in your flat, or to sublet;
High, and non-competitive, charges for the Careline service;
Using the developer’s own estate agency to sell the flat, at higher commission than usual.


Sidebar 2:

What you can do:

You are entitled by law to manage the building yourself, under Right To Manage legislation, rather than using the developer’s own company.
You can challenge the charges at a Leasehold Valuation Tribunal, to see if they are ‘reasonable’;
Join Carlex and add your voice to the campaign.

Carlex: Campaign Against Retirement Leasehold Exploitation: PO Box 697, Chichester, West Sussex, PO19 9NG.