Beware retirement properties

“An investigation has exposed systematic ‘abuse’ in fees for retirement properties.

According to the Law Commission, which has just completed a two-year probe into the practice, retirement home residents are being charged ‘event fees’ triggered by one-off occasions, like sub-letting the property.

It warned that there are “major problems” with the way these fees are charged – and how they are hidden in the small print.

When older people buy a retirement property, it is generally on a leasehold basis. My own grandfather lives in a lovely complex just over the road from my parents.

As with normal residential leasehold properties, there is a host of additional fees to worry about, and they come with all sorts of names – exit fees, transfer fees, contingency fees, etc.

And according to the Law Commission they are open to abuse. Its investigation found that these fees can be hidden within the small print of complex lease documents, or are disclosed too late in the process for the buyer to take them into account.

Bad timing

There is also a significant issue about exactly when these fees are charged, which the Law Commission said may come as a “surprise” to the owner because of how broadly drafted the fee is.

For example, it is reasonable to expect that an event fee might be charged when you sell the property.

But the Law Commission’s investigation found numerous examples of the fee being charged when the property was inherited or mortgaged, when a spouse, partner or carer moved in, or when the normal resident moved out.

These fees aren’t small change either – they can work out as much as 30% of the property’s value!

What’s most irritating about all this is that it is nothing new. Back in 2013 the Office of Fair Trading (remember them?) also looked into the issue, and found the exact same problems, suggesting that a number of the fees being charged were unfair and actually a breach of the Unfair Terms in Consumer Contracts Regulations.

Yet here we are, four years later, and the same fees are being charged, hitting older people in the pocket.

Hurting the supply of retirement homes

These fees are bad enough just from a moral point of view, but some believe that they are actually serving as a barrier to more retirement homes being built.

Nicola Charlton of law firm Pinsent Masons suggested that the “legal uncertainties” over the status of event fees “have in the past dissuaded developers from building the homes older people need and investors from providing the required funding”.

Now that the Law Commission has published its views on the fees, this uncertainty is removed, which could possibly mean extra investment of as much as £3.2 billion into new – and badly needed – specialist retirement housing.

There are currently only around 160,000 retirement properties like those reviewed by the Law Commission, which simply isn’t enough.

Is regulation the answer?

The Law Commission has declined to call for event fees to be scrapped entirely, as it argues that they can actually make specialist housing affordable precisely because some of the payments for services are essentially deferred until the property is sold.

Instead, it wants regulation with the introduction of a new code of practice overseen by the Department for Communities and Local Government.

This code of practice would limit when a fee can be charged, and in some cases exactly how much can be charged.

It would also impose “stringent obligations” on landlords to provide transparent information about exactly which fees may be charged early in the process.

This idea has had a warm welcome from the industry. A statement from the Associated Retirement Community Operators said: “It’s been long overdue, and we believe that an event fee that has not been transparently disclosed should not be charged.

In other countries, event fees are a well-established mechanism that can enable older people to use their housing equity to ‘enjoy now and pay later’, for example by reducing their service charge or deferring some of the costs of building communal facilities.”

However, the Campaign Against Retirement Leasehold Exploitation (CARLEX) described the report as “tokenistic”, adding: “Pensioners and their families who feel they have been blatantly cheated in retirement housing have reason to feel let down.”

What to consider when buying a retirement property

Clearly, if you are thinking about buying a retirement property it pays to look carefully through the contracts to ensure you fully understand what fees you are likely to have to pay and precisely when they may be charged.

It isn’t just these event fees you need to consider either – there will also be service charges to cover maintenance and upkeep of the property to account for. These are often higher than the service charges you may face on a normal property, as retirement homes tend to come with more services included.

Critics claim that the managing agents and maintenance firms are often offshoots from the freeholder, meaning there is no actual competition for the role, resulting in eye-watering overcharging.

It also pays to do your research on the resale value. Have similar retirement properties in the area been resold at a decent price?

These properties can be more difficult to sell than a normal home, while you will want to check the small print of your contract to ensure you are free to choose who you market the property through – some freeholders insist that you resell it through their own company, with a higher fee to pay than selling through an estate agent.

Given how difficult it can be to resell a retirement property, you may prefer to rent instead.”

http://www.bbc.co.uk/news/uk-politics-39678859

More than 200,000 homes empty in England worth more than £43m

“In England there are 200,000 homes that have been sitting empty for more than six months, according to new Government figures. This is equivalent to £43bn worth of housing stock.

In London alone there were 19,845 homes sitting vacant for over six months last year, property that is worth £9.4bn, taking into account average prices.

Kensington and Chelsea has the capital’s highest number of homes which are vacant for more than six months with 1,399 empty, up 8.5pc on last year, and 22.7pc higher than 10 years ago.

This is likely due to the buy-to-leave phenomenon, where wealthy buyers snap up homes as an investment, and leave them empty while waiting for its value to increase.

Communities secretary Sajid Javid downplayed the role of such foreign buyers in exacerbating the housing crisis, saying the problem “isn’t as bad as some people think”. A Savills’ report found that the majority of homes bought by people based overseas were being rented out, rather than left empty. …”

https://t.co/8GXETMiUXs

Every flat in new London estate ‘has been sold to foreign investors”

“Controversially sold off by Southwark Council, the estate once homed 3000 people before being knocked down in 2011.

Now part of the regenerated estate, South Gardens in Elephant Park is said to have sold 51 properties all to overseas investors.

The company developing it, Lend Lease, began selling their properties abroad in Singapore before a single flat was available to British buyers.

Southwark Council spent £44m clearing people from the estate and will be given just £50m from Lend Lease.

It had been valued at more than £100m that figure.

It was revealed that just 82 of the new flats would be sold at an affordable rate, with the average value £790,000 to £1,500,000.

Every flat in new London estate ‘has been sold to foreign investors’

Knowle: magic bean or white elephant?

The big question is ‘what is the chance of Pegasus winning an appeal?’

Probably not that great:

The application is for more than a hundred units when the Local Plan allocation is for fifty.

The application does not include any affordable.

The application is opposed by Sidmouth Town Council and a large and vociferous group of local residents.

Most importantly, the Planning Consultants at the time of the provisional sale to Pegasus foresaw that the application would be refused. So did the Planning Team, who miraculously changed their minds when the application came forward. Both EDDC and Pegasus were warned in advance that the Development Management Committee could not approve the application. Remember: this information came into the public domain as a result of the successful Freedom of Information request.

If the application goes to inquiry, as seems likely, then we, and EDDC, will have to wait for 24 months with little confidence that the appeal will be successful.

Then comes the situation of ‘what happens next?’ Well, we know the answer because Grant Thornton have helpfully predicted four scenarios, all of which will lead to receipts well below the price currently agreed with Pegasus.

The whole process would have to begin again, against a backdrop of a planning appeal refusal. New tender, new negotiation, new design, new application, and perhaps even another refusal.

Eventually an application will succeed, and a sale result, but we could easily be four years down the road, and at a substantially reduced price in possibly a very different property market.

Knowle site value plummets to £3.22 – £6.8 million depending on affordable housing requirement

It is interesting that all scenarios put to the Scrutiny, Audit and Governance and Overview Committee take no account of depreciation on the Honiton HQ.

The committees might want to request the attendance of internal and current external auditors KPMG at their joint meeting, as the relocation finance paper was, for some reason, compiled by former external auditors Grant Thornton.

http://eastdevon.gov.uk/media/2074193/180417-a-and-g-and-s-and-overview-agenda-combined.pdf
page 10

2-year old bottles of urine found behind bath in Bovis home at Cranbrook

Mandy Greeves, 50, found three bottles of ‘urine’ stashed behind a bath panel at her house in Cranbrook, Exeter.

A resident of a new build home was horrified to discover bottles of suspected urine hidden behind a bath panel – nearly two years after she moved in.

Mandy Greeves, 50, says she is grateful now that the containers of yellow liquid have been removed by Bovis Homes , which built her property.

The ‘disgusting’ discovery came to light when Mandy called a plumber friend in to repair a tap at her house in Cranbrook new town near Exeter, Devon.

When the plumber removed the bath panel to fix the problem he discovered three plastic bottles full of a yellow liquid underneath the bath.

The bottles had been covered up by the panel.

Mandy was baffled. “I looked at them, and I thought, ‘Oh my god’. First of all I thought was it milk that had been left there? But it wasn’t.

“You could see that it was urine. I was disgusted. It was just horrible. I couldn’t believe that someone could leave something like that behind.

“I thought, do I throw it away or do I keep it? Then I thought, if I throw it away, I’ve got no evidence.”

Mandy told her friend to put the bath panel back on so that there was evidence to show Sovereign Housing which co-owns the house, and Bovis Homes.

Mandy is the house’s first occupant, and moved in to the property in July 2015.

One of the bottles is dated March 15, which, says Mandy, would tally with the house’s interior being fitted.

“I can’t understand a human being being like that,” said Mandy.

“If they want to go to the toilet, why can’t they do it in the garden? The lawn wasn’t down by then it would have just been mud.

“Why did they have to do it in a bottle and leave it and then put the bath panel back on? It might have been the builders. The guy that put the panel on. Why did he not notice it? It’s not nice.”

A Bovis Homes spokesperson said: “Our regional customer care team were not aware of this matter but now it has been brought to their attention they will contact Sovereign Housing immediately and investigate this situation further.”

http://www.mirror.co.uk/news/uk-news/homeowner-makes-disgusting-discovery-bathroom-10220768

282 flat building has 2 local leaseholders – the rest are overseas investment companies

“A housing development of 282 flats in central Manchester has only two British families living there because foreign nationals have bought the apartments as investments.

Overseas investors in Number One Cambridge Street hail from 18 nations including Azerbaijan, China and Zimbabwe.

Many of the properties are empty as the investors simply hold them until the price goes up and they sell them.”

http://www.dailymail.co.uk/news/article-4389608/Only-two-flats-occupied-Brits-massive-development.html