McCarthy and stone profit warning

I don`t know how a profit warning would affect people in process of buying one of their properties but I would say to beware. Looks as though the stability of living in one of these homes could well be affected
https://www.sharesmagazine.co.uk/news/shares/cautious-customers-and-declining-reservations-at-mccarthy-stone-sparks-profit-warning
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Comments

  • lessonlearned
    lessonlearned Posts: 13,337 Forumite
    Combo Breaker First Post I've been Money Tipped!
    Interesting reading. Tbh I'm not surprised.

    I have looked at them but would be extremely wary. They do not hold their value, in our city resale's often go for as much as 50 percent less their new build price. Plus they take an eternity to sell. So one way and another not a good investment, especially if the money is needed to fund nursing home fees at a later date.

    If I were to buy one then it would have to be a resale rather than a brand new one. I just couldn't countenance that level of depreciation.....worse than a car :rotfl:
  • Lots of retirement properties near where I live and they don't seem to sell well. I've always thought if I needed to move into one I'd rent, lots available here probably because they can't sell them. Bought new they do seem terribly overpriced and I've heard the management costs are high.
  • lessonlearned
    lessonlearned Posts: 13,337 Forumite
    Combo Breaker First Post I've been Money Tipped!
    Yes, I think if I ever get to the stage where I needed some form of specialist retirement housing or sheltered accommodation I would probably rent rather than buy.
  • Silvertabby
    Silvertabby Posts: 9,010 Forumite
    First Anniversary Name Dropper Photogenic First Post
    The monthly management costs - even if you own the flat outright - can be crippling. Our intention is to stay where we are, in the home that we both love, for as long as possible.

    If needs be, we'll take out some form of equity release to pay for a stair lift, easy access shower, a cleaner and a gardener etc.
  • Sterlingtimes
    Sterlingtimes Posts: 2,390 Forumite
    Name Dropper First Post First Anniversary
    This is a very interesting thread.

    I purchased an M&S apartment for my mother in Solihull in 2012 for £85,000. As a new property in 2006 it sold for £206,609 and in 2007 it sold for £211,950.

    As new build properties, they are extremely poor value. The reason that certain apartments tend not to sell is that the vendors have a tendency to overprice in an attempt to realise their investment.

    The people who sold the apartment I bought for my mother was originally priced at £130,000. The vendors, having had the apartment on the market for 12 months, decided to reduce the price drastically to be able to move out.

    Having said all of this they work extremely well for people who need the support of a community. There is no problem with the concept, and the service charge includes many things which would probably be far more expensive if the occupants remained in their own house. I would not view the service charges as astronomical.

    Once the apartments have suffered 50% plus depreciation, their value then tends to follow the ordinary market property index.

    The best plan is to buy an apartment that is at least five years old and then spend some money on making the apartment spick-and-span.
    I have osteoarthritis in my hands so I speak my messages into a microphone using Dragon. Some people make "typos" but I often make "speakos".
  • lessonlearned
    lessonlearned Posts: 13,337 Forumite
    Combo Breaker First Post I've been Money Tipped!
    Very interesting Sterlingtimes.

    Your personal experience reinforces what I have noticed. The same seems to be true about a lot of apartments, not just those for seniors, but apartments in general, at least in my neck of the woods.

    New build apartments here just don't seem to hold their value, in some cases the depreciation rate is worse than a new car.

    At some point, when I am really old and decrepit, and no longer want to drive, I will probably look to move to a city centre apartment but I shall do exactly what you suggest. I will buy a pre Loved one, which has reached the bottom of its depreciation cycle, then spend a bit of money upgrading it.
  • Sterlingtimes
    Sterlingtimes Posts: 2,390 Forumite
    Name Dropper First Post First Anniversary
    Very interesting Sterlingtimes.

    Your personal experience reinforces what I have noticed. The same seems to be true about a lot of apartments, not just those for seniors, but apartments in general, at least in my neck of the woods.

    New build apartments here just don't seem to hold their value, in some cases the depreciation rate is worse than a new car.

    At some point, when I am really old and decrepit, and no longer want to drive, I will probably look to move to a city centre apartment but I shall do exactly what you suggest. I will buy a pre Loved one, which has reached the bottom of its depreciation cycle, then spend a bit of money upgrading it.

    I think that you are right, lessonslearned. I regretted buying a new city centre apartment in Leeds when I worked there on weekdays some years ago. Indeed, that was not a good investment for capital growth. But the loss is nowhere near as great as for retirement apartments which follow their own special depreciation curve.

    The apartment in Leeds city centre has been a poor investment for capital appreciation but has became an excellent rental proposition.

    The M&S properties are very well equipped for elderly people, e.g. the sockets outlet are positioned at hand level, the water temperature is set such that injury is unlikely to occur, and there are hand pulled strings to get emergency help. Usually, there is an on-site housekeeper (not officially a "warden") who can help to a degree with emergencies. The common areas in the gardens are maintained. The service charge really does provide value for money because it is shared on a common basis.

    I have had a look at sold prices at the Land Registry, and in most areas these apartments lose 50% of their value in money terms over five years. It is far better to buy cheaply and then to spend on bringing the apartment back to its original condition. I have noticed that the apartments get very grubby quite quickly because the most elderly occupants do have difficulty with cleaning and with having little things meant it which go faulty.
    I have osteoarthritis in my hands so I speak my messages into a microphone using Dragon. Some people make "typos" but I often make "speakos".
  • [Deleted User]
    [Deleted User] Posts: 12,492 Forumite
    Combo Breaker First Post
    I looked at some rather nice over 55 houses in a small development of 12, with a short gate, so was an enclave. A communal grass area at the front and tiny gardens behind. Not McCarthy homes, they each had a garage and parking and a downstairs study/dining room ie potential bedroom. The estate manager cleaned the gutters and outside windows, cut the grass and generally kept the area nice. For that the management fee was £2400 pa and that did not include any internal maintenance. The houses were all freehold



    This is very interesting, compares a few of the companies
    https://www.housinglin.org.uk/_assets/Resources/Housing/OtherOrganisation/NF69-Retirement-Housing.pdf


    The houses themselves were lovely inside, plenty of space and the garage was quite large, allowing workshop hobbies but I was talking to two different occupiers, lovely people but too communal and definitely an enclave. A `safe` area if you like long holidays but not if you have many hobbies and are an individual personality
  • shykins
    shykins Posts: 2,758 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    Sterlingtimes my experience mirrors yours. mum bought her apartment in a M&S which was a few years old for less than half what it cost new

    her approx £50 a week service charge includes free use of a laundry, including dryers, irons etc, water rates, buildings insurance, upkeep of garden and communal areas as well as an on site manager and alarm cords.

    i think that represents pretty good value, along with the fact my mum now has onsite friends and events and probably now has the best social life she has ever had, better than mine in fact lol
    When you know better you do better

    Atkins since 2004 - 8 stone loss maintaining
  • buglawton
    buglawton Posts: 9,235 Forumite
    Name Dropper First Anniversary First Post
    M&S shares already fell 10% last Dec due to ground rents being already banned according to this
    https://www.leaseholdknowledge.com/tag/mccarthy-and-stone

    Which is contradicted by this later article
    http://www.thisismoney.co.uk/money/mortgageshome/article-5454265/My-parents-buying-retirement-flat-McCarthy-Stone.html
    ...where it says ground rent pays for extensive outdoor/indoor communal facilities

    One thing seems clear, M&C dont charge the big exit selling fee... though I thought I heard the opposite in the news this/last year, but that may have been another retirement home builder.

    Read the lease in advance with a large magnifying glass!
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