Care Home - resale commission.

ThisIsWeird

Hi all.

MIL is currently living in a retirement bungalow in a 'care home' village. The property is currently Leasehold, and the Care Home is looking at stepping back from their FH responsibilities, with a commensurate reduction in services charges. Ie, they are effectively changing the current LHs to effectively Freehold, as well as extending each lease from the current 125 years (now effectively 107-ish) to 999. (That has only just made me wonder why a FH would need a dictated lease duration, but hey...)

Anyhoo, my main Qs are regrading the existing 'resale commission'. This was, I think, 1% when mil bought her bungie, so the vendor had to cough up that 1% to the Care Home. As part of the newly proposed arrangement, this would be upped to 1.8%, to reach a compromise figure with the newly-built phase of bungies, which have this resale fee set at a higher 2.5%.

My Q is, assuming the homeowners now go effectively 'Freehold' - ie, they look after their whole property, inside and out - on what basis could the Care Home expect this sales 'cut' in any case? Can there be any moral justification for it?

Ta.

Brie

The one care home bungalow that I looked into a number of years back for the inlaws included the right by the bungalow residents to have free enjoyment of the care facilities amenities.  So go sit in the lounge and do jigsaws with the other residents, access to some of the recreational activities.  They would also have access to the restaurant but for a fee of some sort as opposed to those who were in more assisted living situations in the complex.  

Or the Care Home is just being greedy and hope to get away with it.

daveyjp

They aren't going from leasehold to freehold.  They want residents to surrender the existing lease and enter  into a new longer lease and one which varies terms as regards the obligations of the freeholder.

You need existing lease and new lease to compare and then decide if the charges under the new lease are reasonable.

Flugelhorn

agree it is just leasehold with a longer lease... which needs renegotiating and they can change the Ts&Cs etc 

elsien

Whether anyone feels it’s morally justifiable or not is academic. It’s what they are legally able to do that matters. 

eddddy

Another consideration to throw into the mix...


A key question is: What happens to the 1% or 1.8% (or 2.5%) fee that's paid?

• Is it a 'deferred service charge'? i.e. it goes into service charge funds
• Or does it just go into the freeholder's pocket?

Taking a step back, in general, the argument for having a deferred service charge is, for example:

• 1) Leaseholders would normally pay the full service charge of £3k per year

• 2) Instead, leaseholders pay a reduced service charge of £1k per year, plus 1% or 1.8% (or 2.5%) of the selling price when they sell (i.e. it's a a 'deferred service charge')

Option 2 might work well for people living on a pension, with limited disposable income each year.

You might be a 'winner' or a 'loser' with option 2, depending on how long you own the flat.


So that's another consideration to investigate, alongside the reduced services and reduced annual service charge.