“Peggy Browning bought a new retirement flat in Devon [Exmouth] priced at £206,450 nine years ago, at the age of 89. After her death last year, the property passed to her two daughters. It is now on the market for £125,000 and is proving difficult to sell. Until a buyer is found, Lyn Field and her sister have to pay the £190 a month (£2,282 a year) management charges on the flat, even though it is empty.
Their story highlights the potential burden of retirement properties for buyers’ descendants. A significant number have lost value in recent years and come with hefty charges that fall on those who inherit the homes.
Sebastian O’Kelly of the campaign group Better Retirement Housing said: “Newly built retirement flats have an appalling reputation for value on resale. This family’s example is by no means unusual.”
Almost two-thirds of new retirement homes bought at a similar time to Browning’s were resold at a loss, research by the charity Elderly Accommodation Counsel (EAC) suggests. By contrast, the average price of a UK home has risen by more than 40%, Land Registry figures show.
Adam Hillier of EAC acknowledged that buyers were prepared to pay extra for new properties, but described the number of such homes that had fallen in value as “surprising”.
£206,450 The value of Peggy Browning’s flat when she bought it in 2008
£125,000 The price her home is on the market for today
£190 Monthly charges that must be covered by her daughters
Additional costs typically include ground rent, paid to the freeholder, and exit fees, calculated as a percentage of the value when the flat is resold. Hillier said exit fees could be as high as 30% in developments offering care in the home and facilities such as shops and subsidised restaurants.
Browning bought her flat in the seaside town of Exmouth from McCarthy & Stone, Britain’s leading retirement home developer. The company said: “We are sorry to hear about the fall in value [of Mrs Browning’s property]. We recognise there are a small number of cases, particularly with our older properties and those sold in the recession, where the resale values of some apartments have not performed as well as we would have wished. This can be down to many reasons, including the performance of some local property markets. … ”
Sunday Times, pay wall
“This can be down to many reasons, including the performance of some local property markets. … ”
Yes that is true it CAN be down to local markets. It CAN also be because McCarthy & Stone convince gullible (and possibly vulnerable) customers that the premium pricing is justified by the facilities – but it would be easy to consider that double accounting because the facilities are paid for by the management charge. It would be interesting to see their sales materials / hear their sales speech to see just how they sell these properties and whether there is any possibility that they are mis-sold (i.e. mis-sold as .in PPI insurance etc. to people who don’t actually need the facilities or by using inappropriate pressure sales techniques).
As they say in property markets … “caveat emptor” – “let the buyer beware” – because a government that believes in free-market unfettered capitalism certainly isn’t going to protect you from property developers charging far above market prices for “retirement” homes.
P.S. Nor will a government whose political party expenses are paid for in a large part by property developers.