Beware of retirement flat schemes

coffeehound · 17 November 2019 at 11:22AM

https://www.theguardian.com/money/2019/nov/16/flat-retirement-builder-value-mccarthy-stone

Perhaps even more shocking is the council tax bill on Cross’s one-bed flat, which has spiralled to £3,000 this year and is heading to £4,500 next year – or more than the tax on a multimillion-pound mansion in Mayfair.

When Cross first inherited the flat in 2015, the estate agents put it on the market for £143,000. But there wasn’t a sniff of interest. It was reduced to £135,000, then £120,000. Cross changed agents seven times. The valuation kept falling – to £99,000, then £89,000, then £69,000, then £59,000. But even at this price, he can’t find a buyer.

Why not? Cross blames what he describes as the “punitive” service charge on the one-bed flat. Last year the charge was £562 every month – equal to £6,744 a year, although this year it dropped back to £519 a month. On top of that, the ground rent is a further £415 a year. In other words, a retired person could be paying nearly all their state pension in service and ground rent charges.

Nightmare :eek:

Be_Happy · 17 November 2019 at 5:37PM

Rather a dramatic headline, based on one retirement scheme.

Things are different here in Scotland. I've been in my retirement flat for 2 years now. We looked at the scheme when the development was built in 2001 and I still have the brochure showing one bedroom flats for sale then at £33,000 and two bedroom at £66,000. These are now selling at £95,000 and 135,000.

Service charge is £100/£150 a month and there was no increase in this last year due to the slight increase being offset by the factor finding a cheaper building insurance policy and estimated costs being less than expected. At the annual meeting the factor's management fee was 0.5% more than the increase in state pensions and when this was pointed out, the factor agreed to reduce their percentage increase to the same amount.

We have an exit fee on selling a property of 1% of the selling price - not extortionate.

To top it all, we have the often mentioned 'dreaded' Comfortplus heating. My flat is always warm and my monthly DD is only £40. Based on last year's figure, SP wanted to decrease it to £33 at last annual renewal, but I asked for it to stay at the previous £40 to cover any colder weather this year.

We have regular meetings between residents and our appointed factor and get on well with the factor.

pollypenny · 17 November 2019 at 10:56PM

There has been concern expressed over these unsaleable places for years.

You're lucky if Scotland has legislated to stop the rip-offs.

[Deleted User] · 17 November 2019 at 11:58PM

There is no way council tax would increase by 50% in one year, although I do agree these place are to be avoided at all cost.

pollypenny · 18 November 2019 at 10:20AM

venison wrote: »

There is no way council tax would increase by 50% in one year, although I do agree these place are to be avoided at all cost.

It was because the property had been empty for some time, meaning triple charges I think. This was brought in to prevent buyers just using property as an investment, leaving them idle.

Pollycat · 19 November 2019 at 8:13AM

venison wrote: »

There is no way council tax would increase by 50% in one year, although I do agree these place are to be avoided at all cost.

pollypenny wrote: »

It was because the property had been empty for some time, meaning triple charges I think. This was brought in to prevent buyers just using property as an investment, leaving them idle.

From the article:

Council tax has turned into a nightmare for Cross. He showed Guardian Money his latest bill from Folkestone and Hythe council. Although the one-bed flat is only a band B property – one band above the lowest valuation – this year’s bill is £2,969.44. Next year it will rise to nearly £4,500.
Cross has been caught by the empty homes premium, an initiative designed to bring longstanding empty homes back into use. It allows councils in England to double the council tax on properties empty for two years, and triple it if they have been empty for five.
As Cross’s home has sat on the market since 2015, the local council has applied the doubling in tax, and can triple it next year.

Murphybear · 21 November 2019 at 9:22PM

venison wrote: »

There is no way council tax would increase by 50% in one year, although I do agree these place are to be avoided at all cost.

The newspaper article said the council tax was heading towards £4500 pa which is blatantly rubbish. I looked it up, the flat address was in the article. As a one bedroomed property the maximum council tax would be £1400 ish

No idea if the rest of the article was wrong.

I knew some people who live in a McCarthy & Stone property. They are really lovely but sound like a financial nightmare.

Savvy_Sue · 21 November 2019 at 10:32PM

Murphybear wrote: »

The newspaper article said the council tax was heading towards £4500 pa which is blatantly rubbish. I looked it up, the flat address was in the article. As a one bedroomed property the maximum council tax would be £1400 ish

You are not taking the 'empty home premium' into account. See the posts above yours.

Yes, once the property is sold the CT will reduce, but until it is sold, the estate has to pay it.

p00hsticks · 22 November 2019 at 12:28AM

Murphybear wrote: »

The newspaper article said the council tax was heading towards £4500 pa which is blatantly rubbish. I looked it up, the flat address was in the article. As a one bedroomed property the maximum council tax would be £1400 ish
.

So once it's tripled for being empty for five years that £1400 turns into £4200 ish

Bonnypitlad · 11 February 2020 at 11:56PM

Is it negative comments and scaremongering that are depressing market values?, the people who live in independent living flats are aware of the service charge and ground rent when they buy. They are happy in their home and not particularly concerned about resale values
They get buildings insurance, heating of common parts, lift maintenance, windows cleaned, gardens maintained, laundry room, communal lounge, secure entrances, a manager, emergency assistance and the company of similar minded neighbours.
Let their heirs worry about resale values
My Sister and her husband enjoy the comfort of their retirement flat

Farway · 12 February 2020 at 10:33AM

Bonnypitlad said:

Is it negative comments and scaremongering that are depressing market values?,
Let their heirs worry about resale values

I suspect it is the heirs' resale value that is depressing the market, if there are loads of empty second hand flats for sale then market forces drive the prices down, supply & demand

Beware of retirement flat schemes

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