Be cautious about buying McCarthy and Stone!

Albermarle

HouseMartin567 said:

Out of curiosity, is this only a problem if you buy new?

I think if you buy a second hand one, they can still be difficult to resell, but of course you will have paid a lot less for it in the first place.
Even if you make a small loss, as another poster said they can be a good place to live for older people.
Problem is if you buy new, the loss can be eye watering as the OP has found out. 

edgex

Albermarle said:

HouseMartin567 said:

Out of curiosity, is this only a problem if you buy new?

I think if you buy a second hand one, they can still be difficult to resell, but of course you will have paid a lot less for it in the first place.
Even if you make a small loss, as another poster said they can be a good place to live for older people.
Problem is if you buy new, the loss can be eye watering as the OP has found out. 

Even if selling a second-hand one, it's now widely known that the service charges are extortionate & that there's a very limited market your trying to sell to.
So a lot less potential buyers.

With such large service charges, unless you got one for a lot less than a comparable normal property, there's always going to be a big loss.

ReadySteadyPop

Flugelhorn said:

agree main problem is that there is a very limited market - can be ideal property for the right person at the right time but there tend to be lots of properties and no many buyers . was looking at some built in 2005 and they still are not reselling for the original selling price 

Isn`t this something government should be looking into? 

Flugelhorn

ReadySteadyPop said:

Flugelhorn said:

agree main problem is that there is a very limited market - can be ideal property for the right person at the right time but there tend to be lots of properties and no many buyers . was looking at some built in 2005 and they still are not reselling for the original selling price 

Isn`t this something government should be looking into? 

why? it is known that the properties are hard to sell and it is a limited market, suspect much of the problem is that one person usually buys the place and another (who probably legally can't live there)  has to sell it.

SarahB16

Albermarle said:

HouseMartin567 said:

Out of curiosity, is this only a problem if you buy new?

I think if you buy a second hand one, they can still be difficult to resell, but of course you will have paid a lot less for it in the first place.
Even if you make a small loss, as another poster said they can be a good place to live for older people.
Problem is if you buy new, the loss can be eye watering as the OP has found out. 

What some people don't realise is that many of the retirement operators recoup some of their costs when there is a sale. 

A person moving into one of these retirement homes has annual service charges which the operator views are manageable to pay on an annual basis but the 'loss' on sale also takes account of ongoing charges which are payable when there is a change of owner so cannot be viewed as a true loss in terms of how we think of a loss from the sale of a house. 

For example, person A buys a retirement apartment for £200k and pays £12k service charges a year but ahead of purchasing the retirement apartment is informed that the retirement operator will also take 20% of the sale proceeds to cover additional service charges,

In five years the apartment is sold to another person for say £200k and say the previous owner passed away and a child inherited the retirement apartment and received £160k (from the sale).  There has not been a £40k loss from the sale.  

Obviously if the actual sales price is less than £200k then yes there would be a loss but that is different to the net sale proceeds/resale value that say a child of the previous occupant would receive.  

Retirement operators say in order for these schemes to be viable they need to recover their costs but they are mindful of how much monthly income these pensioners (most likely) will have so recover some of their costs when there is also a change of owner.  

I'm not sure how many people realise that many (if not all) retirement operators recoup their costs in this way.  I also think the advertising of these retirement homes which are for sale needs to be improved.  

I definitely don't think the housing market satisfactorily caters for older people.  

Personally what I think we need more of are schemes like this but of course some also being for men and women to live together too, i.e. they do not have to be single sex but of course some people may prefer that:  

‘We have brothers, sons, lovers – but they can’t live here!’ The happy home shared by 26 women | Life and style | The Guardian 

Very interested to hear what other people think of the senior cohousing scheme featured in the Guardian. 

k12479

SarahB16 said:

Albermarle said:

HouseMartin567 said:

Out of curiosity, is this only a problem if you buy new?

I think if you buy a second hand one, they can still be difficult to resell, but of course you will have paid a lot less for it in the first place.
Even if you make a small loss, as another poster said they can be a good place to live for older people.
Problem is if you buy new, the loss can be eye watering as the OP has found out. 

What some people don't realise is that many of the retirement operators recoup some of their costs when there is a sale....annual service charges which the operator views are manageable to pay on an annual basis but the 'loss' on sale also takes account of ongoing charges which are payable when there is a change of owner....

‘We have brothers, sons, lovers – but they can’t live here!’ The happy home shared by 26 women | Life and style | The Guardian 

Very interested to hear what other people think of the senior cohousing scheme featured in the Guardian. 

The (potential) problem with that approach is that while annual charges are predictable, guaranteed-ish, recurring income, a percentage from sales is unpredictable and lumpy. With resale value low, the operator's 20% is also low and with properties languishing on the market, neither the sellers nor the operators are getting their share.

The co-housing scheme is interesting but will have the same issue of a limited resale market. Add in that that scheme is new, opening in 2016, and "women manage everything themselves and tasks are divided up among teams of volunteers responsible for maintenance, gardening, communications, cleaning and legal issues" and, despite saying it's "nothing like living in a commune", it sounds like it could have many of the same issues down the line e.g. as raised in this article/comments - https://www.theguardian.com/lifeandstyle/2024/feb/20/everybody-looks-after-each-other-fifty-years-of-the-commune-that-began-with-a-guardian-ad

gm0

There is a good argument in favour of the pay the sinking fund charge (medium term maintenance - roofs, lifts etc.) at death on lease exit - rather than lumping it on the annual opex and regular service charge.  Fixed income elders.  And regular turn over.  And an incentive for the freeholder/operator to be co-operative with turnover of leases. 

This does (sometimes) surprise purchasers and heirs of the purchasers - as indeed does equity release for those staying in a family home but paying for care or other things via that route.  Some people discuss finances with family.  Others do not.  Nobody is wrong.  Some are surprised.  And find it poor value retrospectively.

The retirement community exit levy version has been viewed as a marketing/misselling scandal. I think (without any direct survey) it is less common now because of it.  And an unintended consequence of hounding a "bad" practice out of the market - is that exit levies need to be replaced with along the way service charges.  The need to replace the lifts does not go away because you reprofile the charges in/run/out.

The cost of being in one of these has risen anyway as with all flats.
And the attractiveness/narrowness of the target market moves. As does the capital value of leases

I am only exposed to non-retirement communal service charge budgeting.  And can see how expensive that is.  Without the employed care staff on top.  Communal energy 3x (commercial tariffs uncapped - ukraine). Buildings insurance.  All energy intense building materials and works show massive cost inflation. 

And then add ~100k for care response on site staff costs (or more with scale) and an "agency" cost to manage the estate (As with all flats).

Then divide by N.  It is what it is.  Plus a profit baked into operations - for the commercial versions.

Number of units is a critical feature which post planning permission constraints little can be done about - how many units there are on the site that are paying 1/n for upkeep and their share of the staffing.  The number of flats in the estate and sharing each lift and roof is key to how reasonable or not the charges may seem.  People like smaller blocks. And leafier settings. All of which costs more money. 

But try living in a care home.  Full care shifts and actual nursing needs.  A different thing.  Much higher price. Near total loss of independence and ground into the "convenience" and at times operational necessity of the place. Put to bed in the afternoon as though an infant etc.  I can see how this is an attractive half way house with some retained independence visits and a carer call alarm.  But the financial hangover is severe.

If OP doesn't need other assets to come to heirs from the estate.  Then it can run off and abandon the lease in the empty estate.  Nobody inherits.  Not their issue.  And let the company whistle for the fees and have to revoke the lease - do it up and resell.  Or they can create an armslength care home charity ltd or overseas buyer with a UK relative ltd - with a friend as director  and buy the lease into that cunning if wildly optimistic scheme - moving money in a circle. heir - director - company - estate - heir.  And the lease moves from estate to company.   And then let that company fail when it fails to sub-let or rent it out. Oh dear. Same result.  Nobody on the hook personally to pay the fees thereafter.  Capital value of lease abandoned.  Not suggesting you commit fraud.  Take careful legal advice. Wildly optimistic business plans are not fraud.  See also HomeReit and WeWork.  Oh Wait.

Or they can find an HA that wants units to rent (at the service charge plus a bit) if that's supportable and the lease permits it.  And determine a (low) value for the transfer to them.  Got rid.  Providing something useful.

SarahB16

k12479 said:

SarahB16 said:

Albermarle said:

HouseMartin567 said:

Out of curiosity, is this only a problem if you buy new?

I think if you buy a second hand one, they can still be difficult to resell, but of course you will have paid a lot less for it in the first place.
Even if you make a small loss, as another poster said they can be a good place to live for older people.
Problem is if you buy new, the loss can be eye watering as the OP has found out. 

What some people don't realise is that many of the retirement operators recoup some of their costs when there is a sale....annual service charges which the operator views are manageable to pay on an annual basis but the 'loss' on sale also takes account of ongoing charges which are payable when there is a change of owner....

‘We have brothers, sons, lovers – but they can’t live here!’ The happy home shared by 26 women | Life and style | The Guardian 

Very interested to hear what other people think of the senior cohousing scheme featured in the Guardian. 

The (potential) problem with that approach is that while annual charges are predictable, guaranteed-ish, recurring income, a percentage from sales is unpredictable and lumpy. With resale value low, the operator's 20% is also low and with properties languishing on the market, neither the sellers nor the operators are getting their share.

The co-housing scheme is interesting but will have the same issue of a limited resale market. Add in that that scheme is new, opening in 2016, and "women manage everything themselves and tasks are divided up among teams of volunteers responsible for maintenance, gardening, communications, cleaning and legal issues" and, despite saying it's "nothing like living in a commune", it sounds like it could have many of the same issues down the line e.g. as raised in this article/comments - https://www.theguardian.com/lifeandstyle/2024/feb/20/everybody-looks-after-each-other-fifty-years-of-the-commune-that-began-with-a-guardian-ad

I believe co-housing schemes create waiting lists for people who are interested in moving into these schemes and are given first refusal should a home become available and only if nobody on the waiting list wishes to purchase one of the homes it is advertised on the open market.  The cohousing groups also have activities, e.g. gardening where non-residents can join in again helping to give them a feel of whether they think living there is something that would appeal to them. 

To avoid the feeling of living in a commune I think it would be good to see cohousing communities as part of larger developments so the people living there are interacting with younger people/neighbours (and who may very well be interested in living there when they are older). 

Many older people wish to downsize but don't wish to leave the area they know and love despite struggling with stairs, having the cost of heating a home which is much bigger than they need, etc however senior cohousing schemes may help to solve those issues.  

In addition, many people stay in hospital for longer than they need to.  If a person lived in a senior cohousing community they are very likely to have a good support network around them and could leave hospital sooner.  Loneliness is also a big problem for the older generation in our country too again these types of schemes could help due to the way residents would naturally interact with one another.  

As I said I'm genuinely interested to hear whether senior cohousing schemes are something that sounds appealing. I don't necessarily mean appealing for you but more generally as a new kind of housing offering.  

k12479

SarahB16 said:

k12479 said:

SarahB16 said:

Albermarle said:

HouseMartin567 said:

Out of curiosity, is this only a problem if you buy new?

I think if you buy a second hand one, they can still be difficult to resell, but of course you will have paid a lot less for it in the first place.
Even if you make a small loss, as another poster said they can be a good place to live for older people.
Problem is if you buy new, the loss can be eye watering as the OP has found out. 

What some people don't realise is that many of the retirement operators recoup some of their costs when there is a sale....annual service charges which the operator views are manageable to pay on an annual basis but the 'loss' on sale also takes account of ongoing charges which are payable when there is a change of owner....

‘We have brothers, sons, lovers – but they can’t live here!’ The happy home shared by 26 women | Life and style | The Guardian 

Very interested to hear what other people think of the senior cohousing scheme featured in the Guardian. 

The (potential) problem with that approach is that while annual charges are predictable, guaranteed-ish, recurring income, a percentage from sales is unpredictable and lumpy. With resale value low, the operator's 20% is also low and with properties languishing on the market, neither the sellers nor the operators are getting their share.

The co-housing scheme is interesting but will have the same issue of a limited resale market. Add in that that scheme is new, opening in 2016, and "women manage everything themselves and tasks are divided up among teams of volunteers responsible for maintenance, gardening, communications, cleaning and legal issues" and, despite saying it's "nothing like living in a commune", it sounds like it could have many of the same issues down the line e.g. as raised in this article/comments - https://www.theguardian.com/lifeandstyle/2024/feb/20/everybody-looks-after-each-other-fifty-years-of-the-commune-that-began-with-a-guardian-ad

I believe co-housing schemes create waiting lists for people who are interested in moving into these schemes and are given first refusal should a home become available and only if nobody on the waiting list wishes to purchase one of the homes it is advertised on the open market.  The cohousing groups also have activities, e.g. gardening where non-residents can join in again helping to give them a feel of whether they think living there is something that would appeal to them. 

To avoid the feeling of living in a commune I think it would be good to see cohousing communities as part of larger developments so the people living there are interacting with younger people/neighbours (and who may very well be interested in living there when they are older). 

Many older people wish to downsize but don't wish to leave the area they know and love despite struggling with stairs, having the cost of heating a home which is much bigger than they need, etc however senior cohousing schemes may help to solve those issues.  

In addition, many people stay in hospital for longer than they need to.  If a person lived in a senior cohousing community they are very likely to have a good support network around them and could leave hospital sooner.  Loneliness is also a big problem for the older generation in our country too again these types of schemes could help due to the way residents would naturally interact with one another.  

As I said I'm genuinely interested to hear whether senior cohousing schemes are something that sounds appealing. I don't necessarily mean appealing for you but more generally as a new kind of housing offering.  

I think all of your points are valid.

But look at that example - they are 58-94, have an 8 year old building and they "manage everything themselves and tasks are divided up". In say, 5 years, they will be 63-99 and have a 13 year old building. Even with a death or two and replacement residents, the average age will rise. They will have increased maintenance to deal with coinciding with reduced ability, so either things will deteriorate or they'll need to outsource. In either case the value of their properties will be negatively affected - and you're back to the same old retirement property issue.

Without considering it too deeply, I think the link between housing being an asset/investment/inheritance needs to be broken for something viable. Perhaps exchanging your property/capital for a perpetual tenancy, like an annuity those who live longer 'win', those who don't 'lose'. Or simply a high rent.

gm0

There some good examples from overseas where non-residential care while living in the community for dementia suffering and other declining elders has been greatly extended by designing it in holistically - to a community scale housing and amenities setting - location design adapted to need and appropriately staffed shop/cafe etc.  Isolated pilots.  Netherlands (my recall doubtful).  This requires space - land - and funding of the (leveraged) carer element from a mix of resident/family and social care budget. Outside a large city but adjacent for volumes of potential residents.  The results appear superior on a quality dimension (activity, independence, capability) to the 10 minute door dash from place to place of LA care support contractors as currently prevalent in the UK. Which is rubbish.  But still better than premature admission to a residential care setting - if only just.

Adapted care communities also require explicit charitable and/or government social care funding as a subsidy for management.  Mangement is needed (dementia obvious) but more generally to avoid the "commune age out failure problem" endemic to DIY efforts. The workload increases as the capacity decreases.  In a commune - it's good for the still able elders at the start who die before it's an issue.  And the relative youngsters at the start - are later declining elders with a problem.  And the same "it's less attractive to enter now" issue in attracting more youngsters to take on both more cost and (deferred) work.  The same issue that older commercial sheltered sites run into with the cost of maintenance and upgrade and unattractive levels of service charge.  Same work. Mix of £ and personal time has shifted.