Extra Care housing costs

skyblues87

I'm looking into options for my Mum and where she is based, in Coventry, the options seem limited

Bit of background, she's mid 70s and in OK health at present but with my Dad having moved into residential end of life care is starting to think the house is too big for her to cope with going forward, it definitely is and in all honesty they probably should have downsized about 30 years ago!

There's a retirement village which seems to fit the bill but before I arrange a viewing I'm trying to get an idea of the costs involved and it's already starting to seem very unaffordable

There's two main areas of concern, the ongoing charges and what happens when the property is vacated 

A one bed flat is £260K, on top of that there's ground rent, service charge, management charge, amenity charge and community charge. Hard to find figures for those without arranging a viewing and no doubt getting the hard sell, don't really want to take Mum there have her like it and then have to say we can't afford it. The only one I can find a figure for is the service charge which according to a 2018 local news article was £575 a month. It then seems use of some of the facilities, such as the gym and any activities are an additional charge. And of course there's all the regular bills on top, utilities, council tax, internet etc

Now here's the part that concerns me the most. When the property is vacated it is purchased back by the company that runs the facility but only at the price you paid originally, at present £260K. But before you get that they deduct a fee, £750, for buying it back from you and as if that's not enough there's then a 1%, or £2,600, charge for every year you've been resident.

Given how long my grandparents lived it's entirely possible Mum could be there 20 years so come the year 2043 the amount the flat would be purchased back at would be £207,250. Even before you factor in inflation or rising house prices that seems a bad deal. Using the last 20 years as an indicator £260K 20 years ago would be £425K now, looking at property values is even worse, a £260K property 20 years ago would be worth £560K now! By my, admittedly terrible maths that's either a 105% or 170% loss!

Am I missing something?

eddddy

skyblues87 said:

Now here's the part that concerns me the most. When the property is vacated it is purchased back by the company that runs the facility but only at the price you paid originally, at present £260K. 

I haven't come across a scheme where you have to sell back to the operators for the price you paid. That does seem strange.

(Although lots of people complain that retirement properties are difficult to sell, and they sometimes have to sell them at a loss. So it sounds like that won't happen in this case.)

skyblues87 said:

...and as if that's not enough there's then a 1%, or £2,600, charge for every year you've been resident.

That kind of arrangement is fairly common for retirement properties.

It depends where that money goes. Sometimes it's a deferred service charge. i.e. The resident pays a reduced service charge for the time they live there, then pays a lump sum when they sell.


As a simplified example, let's say the resident lives in the property for 10 years

• The full service charge should be around £3k per year (so £30k in total for 10 years)

• But the resident pays a reduced rate of £400 per year (so £4k in total for 10 years)

• So at the end of 10 years when the property is sold - the remaining £26k is paid (to make up the £30k total)

So if it works like that, maybe it's OK. The £26k is put into the sinking fund. But you need to check. Some "less good" retirement home operators charge the full service charge each year - and then pocket the £26k when the property is sold (instead of putting it into the sinking fund).

skyblues87 said:

Hard to find figures for those without arranging a viewing and no doubt getting the hard sell, don't really want to take Mum there have her like it and then have to say we can't afford it.

Your request for the figures sounds reasonable. Maybe you should do the initial viewing by yourself. If you think your Mum might like it, say that you want to see the figures before arranging another viewing for your Mum.


For comparison, maybe look at some other retirement properties with different operators - and see what their terms are.
 

elsien

Have you looked at the housing association extra care facilities in the area, where she can rent instead of buy? This is one example. There are others.

https://www.midlandheart.org.uk/find-a-home/retirement-living/coventry/poppy-court/

skyblues87

eddddy said:

skyblues87 said:

Now here's the part that concerns me the most. When the property is vacated it is purchased back by the company that runs the facility but only at the price you paid originally, at present £260K. 

I haven't come across a scheme where you have to sell back to the operators for the price you paid. That does seem strange.

(Although lots of people complain that retirement properties are difficult to sell, and they sometimes have to sell them at a loss. So it sounds like that won't happen in this case.)

skyblues87 said:

...and as if that's not enough there's then a 1%, or £2,600, charge for every year you've been resident.

That kind of arrangement is fairly common for retirement properties.

It depends where that money goes. Sometimes it's a deferred service charge. i.e. The resident pays a reduced service charge for the time they live there, then pays a lump sum when they sell.


As a simplified example, let's say the resident lives in the property for 10 years

• The full service charge should be around £3k per year (so £30k in total for 10 years)

• But the resident pays a reduced rate of £400 per year (so £4k in total for 10 years)

• So at the end of 10 years when the property is sold - the remaining £26k is paid (to make up the £30k total)

So if it works like that, maybe it's OK. The £26k is put into the sinking fund. But you need to check. Some "less good" retirement home operators charge the full service charge each year - and then pocket the £26k when the property is sold (instead of putting it into the sinking fund).

the buy back thing is very much phrased as they're doing you a favour but the more I thought about it the worse the deal seemed. 1 bedroom places are going for £260K at the moment which would mean a £2.6K per year payment at the point of sale. Which would be fine if it wasn't for the fact there's ongoing service charge, management charge, amenity charge and community charge to pay. 

Even going from the 2018 figure, the only one I can find, the service change alone is nearly £7K a year, add on the 3 other charges and it could easily be approaching a grand a month ongoing with another £2.6K a year when the property is sold back. That seems a hell of a lot, especially when everything offered seems to be another charge on top. 

There doesn't seem much locally, and a lot of places seem to not make their costs publicly available, but looking a bit further afield to Birmingham it seems to generally be one or the other. You either pay fees as you go alone or they get deducted at the end. This seems the worst of both worlds before you even consider you're not getting market rate for the properly when you sell it back. 

skyblues87

elsien said:

Have you looked at the housing association extra care facilities in the area, where she can rent instead of buy? This is one example. There are others.

https://www.midlandheart.org.uk/find-a-home/retirement-living/coventry/poppy-court/

I'll take a look at that one, thanks. My Mum is giving me an extremely limited area to work with. She doesn't really want to move away from the area she is in now and there is literally zero options there. 

eddddy

skyblues87 said:

That seems a hell of a lot, especially when everything offered seems to be another charge on top. 

When you compare service charges etc at different properties, it's worth comparing what's included in the service charge at each property.

For example, a retirement property leaseholder told me that all the following were included in her service charge (with no extra costs to pay) ...

• Maintenance, repair and replacement of storage heaters - she'd had two replaced in the time she was there
• An engineer coming to fix her hot water
• A plumber replacing bathroom fittings, unblocking the sink, etc
• An electrician to fix electrical problems in the flat
• They said they would even change blown light bulbs, if she was unable to

So whilst service charges are high, there are no heating engineer's bills, no electrician's bills, no plumber's bills and no handyperson's bills to pay each year.

Plus the facilities they provide include:

• A warden who visits each flat twice a week to check on residents
• An emergency pull-cord and intercom in each room - which is answered 24/7
• A lift (because many residents can't manage stairs)
• Communal laundry facilities
• Communal areas for 'gatherings'
• Plus stuff like entryphones, electric sliding entrance doors etc

But obviously, the properties you're looking at might have different terms.

jonnydeppiwish!

Can she stay where she is? Adapt the current accommodation to suit needs as they develop? My parents (78) have just changed the downstairs to allow them to stay downstairs should the need arise this staying in the area they love without costing them the sale of a house and purchase of a new place.

jonnydeppiwish!

Also, should your mum need care, she’ll then have the value of the house to ensure she gets the best care feasible for her.

carefullycautious

Local Authority sheltered accommodation? She could rent a small apartment or bungalow in her area. Check with her local authority for how to apply. 

Paying all those service charges for a depreciating property would be an absolute no no.

ManuelG

skyblues87 said:

elsien said:

Have you looked at the housing association extra care facilities in the area, where she can rent instead of buy? This is one example. There are others.

https://www.midlandheart.org.uk/find-a-home/retirement-living/coventry/poppy-court/

I'll take a look at that one, thanks. My Mum is giving me an extremely limited area to work with. She doesn't really want to move away from the area she is in now and there is literally zero options there. 

Does that area include Willenhall? Because if not... I'd probably give it a miss.

diystarter7

Hi OP

Others have touched on renting extra care, worth a look, IMO
Another alternative is adapting the place but I guess it will still be too big for mum.

You can ring up any coucil in an area that mum is interested and get info re shelter, extra care shelter etc and an indicatiion on any waiting lists/rents etc.

You may want to ring the council or look it up, and the housing department as they should have lists of all shelters, extra care homes etc and a bit more. The council I worked for had info on all of these schemes in our area. Th coucil will tell you of any schemes they are involved with and waiting lists etc and more info/leaflets etc
See below, you may be aware of most of it but it could help you or others reading this.


Below, as always Age Concern does a good write up:

The cost of assisted living varies depending on whether you rent or buy your accommodation, the scheme you choose, the level of care you need, and where you want to live. As the services offered by extra-care facilities vary so much by site and individual needs, it’s impossible to guess how much it will cost for any one individual, but the costs should be lower than for residential care.

There will be ongoing charges for the care and assistance provided, as well as a regular ‘service charge’ to cover the management and upkeep of the scheme. If you are renting a property there will be rent to pay, and if you have bought a property on a leasehold basis (housing for older people is mostly sold leasehold), there will be ground rent.

On top of this, you have to pay council tax, water rates and energy bills. Some charges for water and fuel may be part of your service charge if they are for communal areas. This includes water to a communal laundry or fuel bills for lighting and heating the corridors or a communal lounge.

It's important to be clear about all the charges you will have to pay, including any one-off fees such as administration or exit fees, before you make a commitment. Check how and when any regular charges, such as the service charge or the charges for care and support, can be increased.

You may be able to get help with your rent and/or service charges through Housing Benefit (if you are renting) or Pension Credit (if you own your home). Help with council tax and the cost of care and support may be available through the local authority.

https://www.ageuk.org.uk/information-advice/care/housing-options/assisted-living-and-extra-care-housing/

https://www.coventry.gov.uk/care-support/types-support/4

:Good luck