Retirement Flats

djt1

Whether this should go here, or in the & planing for retirement forum, I'm unsure. Mods feel free to move.

I am looking into relocating a relative who is about 200 miles away from me, so that things are easier for me, safer and quicker to deal with any eventualities for them. I should point out that they also feel this is the best of a number of available options.

I have been looking at warden assisted retirement flats and have found something which I thought was suitable and reasonably priced along with reasonable service charges/ground rent etc. However, upon further investigation, I have found out that not only is 1.5% assignment fee payable to the landlord if and when sold in the future, there is also a 0.5% x number of years resident contribution to the 'sinking fund', i.e 10 years resident would equate to 5% of the sale price.

My question is, are these charges reasonable and if I look around will I find anything more reasonable, or are the leases on all these retirement properties tied up with additional charges that probably get overlooked when purchasing such properties?

It feels as if it's very much taking advantage of the elderly generation.

With thanks in advance.

eddddy

djt1 wrote: »

...
However, upon further investigation, I have found out that not only is 1.5% assignment fee payable to the landlord if and when sold in the future, there is also a 0.5% x number of years resident contribution to the 'sinking fund', i.e 10 years resident would equate to 5% of the sale price.
...

The management companies regard the 0.5% per year as a 'deferred service charge'.

So their justification is that they would normally charge an extra 0.5% each year as a service charge - but they leave the charges to accumulate until you sell.

I guess all you can do is compare communal facilities/services at each development against the service charges, and decide which offers best value for money.

(The OFT investigated this area, and as a result OFT pressure, some freeholders made voluntary undertakings not to charge all the fees noted in their leases. So don't just rely on what the lease says, check with the freeholder as well.

See page 44 onwards of http://webarchive.nationalarchives.gov.uk/20140402142426/http:/www.oft.gov.uk/shared_oft/consumer-enforcement/retirement-homes/oft1476.pdf)

djt1

Hi eddddy,

Thanks,

eddddy wrote: »

The management companies regard the 0.5% per year as a 'deferred service charge'.

So their justification is that they would normally charge an extra 0.5% each year as a service charge - but they leave the charges to accumulate until you sell.

I guess all you can do is compare communal facilities/services at each development against the service charges, and decide which offers best value for money.

This is my point, I would prefer it if it was paid as part of the service charge, at least then you know what you are paying upfront. I guess I do know what I'm paying (if I choose to go down this road), but I'm sure there's many unsuspecting people out there, who this is designed to trick.

eddddy wrote: »

I guess all you can do is compare communal facilities/services at each development against the service charges, and decide which offers best value for money.

They all seem much of a muchness. Admittedly, I have been looking to turn something round relatively quickly due to circumstances.

I will look at the link you posted, I'd hazard a guess that these clauses are non negotiable.

Ta

djt1

Rambosmum

Have you considered renting one? It may be better long term and free up money for care/ leisure? They can also be pretty hard to sell on. What does your relative think?

djt1

Renting not really an option for various reasons.

Also, note there is an annual charge for sinking fund, on top of the 0.5% x years. Will contact the management company/leaseholder to see if they have voluntarily signed up to the OFTs recommendations.

eddddy

djt1 wrote: »

I will look at the link you posted, I'd hazard a guess that these clauses are non negotiable.

It's not so much a case of them being non-negotiable.

I think the OFT felt some of the terms were 'unfair contract terms' (i.e. unenforceable). Rather than fighting a court battle with the OFT, the freeholders volunteered not to enforce the terms.