Be cautious about buying McCarthy and Stone!

Albermarle

We live quite close to one of the posher retirement villages. Although I have no intention of living there, they do send info out to local people of a certain age. So out of interest and being an MSE person I did look at the cost structure.
Two bed apartments are in the £700k region. Leisure club, restaurant etc. on site.
Service charge is £15Kpa ( Option 1) or £8Kpa( Option2) with the rest deferred. Covers most things but not utilities, contents insurance or council tax . Extra personal care is extra of course. Parking fee £700.
On resale. 1% admin charge . Deferred management charges as follows.
Option 1 - 1% of sale price per year of occupation up to a max of 15%
Option 2 - 2% of sale price per year of occupation up to a max of 30%.

So in theory under Option 2 if you resold after 15 years at current prices they would take £215K, although to be fair service charges of £8Kpa for such an upmarket facility is not bad.

The trick would be to go for Option 2 and live there 30 years !

edgex

I don't know why people are bringing care into this?

McCarthy & Stone et al aren't running care homes. Any care services available will be separately charged for.
£800p/m service charge isn't providing any care services when a care home is £800+per week.

City centre flats in Birmingham have service charge + ground rent often between £180 & £300 a month, with most at the lower end.

There's a development in a suburb for older visually impaired people, with a warden, & the following;
Facilities include Voice Guided Lifts, Restaurant, Large Communal Lounge, Community Hub, Laundry Room, Scooter Storeroom, Hairdressers, On Site Handyman, Guest Suite for Visitors, Communal Gardens & Communal Car Parking.
Service charge is £515p/m
A 2bed flat there is £115k

HouseMartin567

Albermarle said:

We live quite close to one of the posher retirement villages. Although I have no intention of living there, they do send info out to local people of a certain age. So out of interest and being an MSE person I did look at the cost structure.
Two bed apartments are in the £700k region. Leisure club, restaurant etc. on site.
Service charge is £15Kpa ( Option 1) or £8Kpa( Option2) with the rest deferred. Covers most things but not utilities, contents insurance or council tax . Extra personal care is extra of course. Parking fee £700.
On resale. 1% admin charge . Deferred management charges as follows.
Option 1 - 1% of sale price per year of occupation up to a max of 15%
Option 2 - 2% of sale price per year of occupation up to a max of 30%.

So in theory under Option 2 if you resold after 15 years at current prices they would take £215K, although to be fair service charges of £8Kpa for such an upmarket facility is not bad.

The trick would be to go for Option 2 and live there 30 years !

Wow, those exit fees are crazy. Just checked the complex near me (run by Churchill) and the exit fee there is 1% of sale (total not year) which goes into the sinking fund. So seems these things vary massively.

And as Edgex says, all flats have service charges and ground rents which are due until sale completion (granted it sounds like retirement flats take longer to sell).

BarkingDog

These retirement flats/apartments may meet needs of retirees if they can afford to pay the charges, however they are dreadful 'investments'. The poor investment reality never hits people until its time to re-sale the property. 

Potential purchasers need to remember keys facts as far as 'investment' is concerned:
The age restrictions restrict the pool of people eligible to buy so will act as a limit on potential future demand;
There is often a high number of very similar properties in individual developments and high numbers of such properties have been developed and still are. This means there is no scarcity of supply especially when many owners are nearing the point when they will need to go into care or are approaching end of life. There will always be a steady supply of properties. (A friend is trying to sell her mother's flat and there are 5 other carbon copy flats for sale in the same development, all trying to achieve the unrealistic purchase price of 5 - 7 years ago!).
The ground rents and maintenance charges are subject to review and will only increase. The ownership of ground rents and freeholds can be sold on and, if they haven't already been sold to an off-shore or 'mercenary' management company there is nothing currently preventing that from happening and so will deter potential buyers;
Ground rent, maintenance charges and council tax make small flats very expensive to live in;
There is little incentive for Mccarthy Stone resale agency to sell pre-own flats because they are continuing to receive the maint charges and ground rents on unsold properties and don't want to compete with their new flat sales;
These flats have generally been sold new at over inflated prices by slick marketing teams using unrealistic projections at locations where pre-owned sales haven't happened. Concerns and fears about future costs and problems reselling are dismissed and dispatched by false reassurances that "property prices always go up in the UK" because they do don't they?

Albermarle

BarkingDog said:

These retirement flats/apartments may meet needs of retirees if they can afford to pay the charges, however they are dreadful 'investments'. The poor investment reality never hits people until its time to re-sale the property. 

Potential purchasers need to remember keys facts as far as 'investment' is concerned:
The age restrictions restrict the pool of people eligible to buy so will act as a limit on potential future demand;
There is often a high number of very similar properties in individual developments and high numbers of such properties have been developed and still are. This means there is no scarcity of supply especially when many owners are nearing the point when they will need to go into care or are approaching end of life. There will always be a steady supply of properties. (A friend is trying to sell her mother's flat and there are 5 other carbon copy flats for sale in the same development, all trying to achieve the unrealistic purchase price of 5 - 7 years ago!).
The ground rents and maintenance charges are subject to review and will only increase. The ownership of ground rents and freeholds can be sold on and, if they haven't already been sold to an off-shore or 'mercenary' management company there is nothing currently preventing that from happening and so will deter potential buyers;
Ground rent, maintenance charges and council tax make small flats very expensive to live in;
There is little incentive for Mccarthy Stone resale agency to sell pre-own flats because they are continuing to receive the maint charges and ground rents on unsold properties and don't want to compete with their new flat sales;
These flats have generally been sold new at over inflated prices by slick marketing teams using unrealistic projections at locations where pre-owned sales haven't happened. Concerns and fears about future costs and problems reselling are dismissed and dispatched by false reassurances that "property prices always go up in the UK" because they do don't they?

I wonder though whether exactly the same applies to all types of these developments.
Close to where I live there is a very upmarket retirement village. It looks nothing like the usual McCarthy & Stone retirement flats/blocks.
It is made up of very substantial two storey blocks of maisonettes set in grass/parkland and at the centre a restored large Victorian building, housing more flats and gym/pool/ restaurant/bar etc .
It is gated with a security guard. It is a pleasant and convenient location, and it would be a desirable place to live ( if you liked that sort of thing).
I would still expect some issues trying to recoup the initial sale price ( as with all new builds) but I would be surprised if you would have the same extent of resale issues like the OP ( and you) mention. 
Although I do not really know.

D_P_Dance

I have lived in a 2 bedroom MS retirement flat in Caversham for two years.  It is quite spacious, just under 900 square feet, and the service charge and  ground rent are £5,300.  For this is get a communal lounge, a laundry, disability scooter room, site manager,  garden, maintenance, insurance,  etc.  It is 11 years old, and I paid less, (not a lot) than it cost new.  My energy bills are a sixth of what I was previously paying. and the flat is always warm.

I see similar flats being sold quite quickly in this block on Rightmove at circa  to what I paid, so I have not made a profit on it, but it is in the village centre, two minutes from both Waitrose, and the Thames.  There are more restaurants and pubs than you can shake a stick at, It is close to Reading station, (23 minutes to Paddington), buses every few minutes into Reading, and gorgeous country pubs nearby. 

I understand that when I pop my clogs  my kids will have to pay a 1% exit fee, fine, and that service charges are payable even when  it is unoccupied, but that is not a problem.

I like it here, as do most of the other residents.

SDLT_Geek

D_P_Dance said:

I have lived in a 2 bedroom MS retirement flat in Caversham for two years.  It is quite spacious, just under 900 square feet, and the service charge and  ground rent are £5,300.  For this is get a communal lounge, a laundry, disability scooter room, site manager,  garden, maintenance, insurance,  etc.  It is 11 years old, and I paid less, (not a lot) than it cost new.  My energy bills are a sixth of what I was previously paying. and the flat is always warm.

I see similar flats being sold quite quickly in this block on Rightmove at circa  to what I paid, so I have not made a profit on it, but it is in the village centre, two minutes from both Waitrose, and the Thames.  There are more restaurants and pubs than you can shake a stick at, It is close to Reading station, (23 minutes to Paddington), buses every few minutes into Reading, and gorgeous country pubs nearby. 

I understand that when I pop my clogs  my kids will have to pay a 1% exit fee, fine, and that service charges are payable even when  it is unoccupied, but that is not a problem.

I like it here, as do most of the other residents.

If the flat is 11 years old, then it must have been built after 1 September 2008.  There is something here https://www.mccarthyandstone.co.uk/about-us/faqs/ under the heading "Selling your retirement property" for "Do you charge a transfer or exit fee" which might be of interest to what you say about the 1% exit fee.

silvercar

It’s a bit like buying cars, buy second hand and you don’t lose the share of the purchase price that goes with a new build.

Yorkie1

SDLT_Geek said:

D_P_Dance said:

I have lived in a 2 bedroom MS retirement flat in Caversham for two years.  It is quite spacious, just under 900 square feet, and the service charge and  ground rent are £5,300.  For this is get a communal lounge, a laundry, disability scooter room, site manager,  garden, maintenance, insurance,  etc.  It is 11 years old, and I paid less, (not a lot) than it cost new.  My energy bills are a sixth of what I was previously paying. and the flat is always warm.

I see similar flats being sold quite quickly in this block on Rightmove at circa  to what I paid, so I have not made a profit on it, but it is in the village centre, two minutes from both Waitrose, and the Thames.  There are more restaurants and pubs than you can shake a stick at, It is close to Reading station, (23 minutes to Paddington), buses every few minutes into Reading, and gorgeous country pubs nearby. 

I understand that when I pop my clogs  my kids will have to pay a 1% exit fee, fine, and that service charges are payable even when  it is unoccupied, but that is not a problem.

I like it here, as do most of the other residents.

If the flat is 11 years old, then it must have been built after 1 September 2008.  There is something here https://www.mccarthyandstone.co.uk/about-us/faqs/ under the heading "Selling your retirement property" for "Do you charge a transfer or exit fee" which might be of interest to what you say about the 1% exit fee.

Although if you look at Q1 in that section, "What happens when I want to sell my MS property?" - the final para in that response is "NB: You will be charged a contingency fee at 1% of the total resale price for the development’s reserve or sinking fund."

So there is still a 1% fee, apparently, but it's not called an exit fee.

bouicca21

I think much depends on the development itself. Three friends have inherited such properties.  It took one 18 months to find a buyer, but the other two had no problem at all - there were waiting lists of people eager to move in.