The hidden cost of retirement properties
In the glossy brochures often used to promote them, retirement complexes can look very attractive. With rising life expectancy meaning that many more of us are likely to live well into our 90s and beyond, they can be an appealing proposition, especially for those who don’t have immediate family to look after them.
THE ADVANTAGES THEY OFFER
This type of living environment can provide a ready-made community of similaraged people, a warden who often lives on the premises, panic buttons located in every unit, a residents’ lounge offering the opportunity for socialising, as well as attractive landscape gardens and grounds. Meals are often available from an in-house restaurant, and many complexes offer help with household chores like laundry. Residents don’t have to worry about repairs or maintenance issues, as these services are included.
ADDITIONAL CHARGES MAY APPLY
However, it’s important to be aware that retirement properties, for all their many benefits, don’t operate quite like the rest of the property market. There may, for instance, be an exit fee on resale. This is a sum of money that goes back to the freeholder, and is built into the lease.
In addition, the service charges can be much higher than you’d expect to pay for an ordinary flat, mainly because there are far more services on offer to cater for the needs of elderly residents. If you’re thinking of buying a retirement property, you may need to ensure that your pension or retirement income will be sufficient to cover these costs.
It’s also important to be aware service charges are payable up until the property is sold. This means if the owner needs to go into hospital or care, the service charge still needs to be paid. If the owner dies, the same thing applies. Retirement flats can be hard to sell, and over the last few years haven’t generally enjoyed the growth in value experienced elsewhere in the property market.
LOSSES ON SALE
In some instances, when the property needs to be sold, the freeholder will stipulate that this must be done through their own company. This can mean that the charges will be higher than those of high street estate agents.
DOING YOUR HOMEWORK
If you’re thinking about buying this type of property, talk through the terms of the lease with your solicitor. Contact the manager of the development and ask to meet other residents. Seek their views on issues like the quality of the management, repairs and maintenance, service charges and the range of services on offer. Some retirement complexes are now offering ‘Try before you buy’ stays to provide wouldbe residents with a chance to sample the lifestyle before committing to purchase.