The elderly facing hidden fees on retirement properties
As the age demographic of our society has changed over the last 2 or 3 decades there has been a similar change in approach to living in one’s retirement. In this period there has been a marked growth in the development of purpose built retirement developments. A number of companies have sprung up whose business model is geared to this sector of housing.
A great deal of the publicity material for the many new developments directed at the elderly shows healthy, happy and active elderly people playing with their grandchildren with hazy sunshine and blue skies in the background.
The comfort of our elderly parents or relatives is paramount and these types of advertisements go a long way to entice us to consider the option of buying a retirement home, and in so doing removing the concerns of loneliness and lack of companionship.
Sadly there is a rising practice in some developments where, having sold the idea to potential buyers who have set their hearts on the final property that they will purchase, the legal papers introduce an unexpected angle to buying such a property in the form of a fee payable to the landlord on the future sale. The normal reasons for a sale are on the passing away of the property owner or their being moved into accommodation where they will have more hands-on support such as in a nursing home.
In the case of one development, the lease refers to “a relevant percentage” being payable to the landlord on completion of the sale by the seller. The relevant % is an eye watering 12.5% on properties that command prices in excess of £400,000.00. In one recent sale, the “relevant percentage” worked out at over £54,000.00.
Other developments add on similar fees such as a 1% “contingency fee” and an additional 1% “transfer fee”.
Such fees are in addition to any estate agents fee that sellers may be bound to pay over and above the monthly service charge and annual ground rents payable. These too are also not insubstantial.
There is of course the option for the elderly buyer not to proceed with the purchase on sight of the lease terms, but if the property is the perfect fit for that person there is a huge reluctance to go back to the drawing board.
The law needs to be changed to prohibit landlords from charging these additional fees with an obligation to be placed on landlords to provide a deed of variation to change existing leases in order to remove this type of clause.
Perhaps there is also merit in consumer organisations and consumer programmes highlighting these issues so that the public can be made aware and educated about this practice.
This is not legal advice; it is intended to provide information of general interest about current legal issues.