Retirement flats – the big con

Tens of thousands of families have seen their inheritances decimated after elderly relatives paid inflated prices for new retirement homes that have collapsed in value, an investigation by The Times has found. Prices of retirement flats in developments built by some of Britain’s biggest housebuilders have plummeted by up to 90 per cent in the face of costly annual management charges and ground rents.

Analysis of Land Registry data suggests that £3 billion could have been wiped from the value of retirement homes built between 2001 and 2015. In one case, a flat bought for £197,000 in 2009 from builder McCarthy & Stone, a FTSE 250 company, was sold for only £26,000six years later. The owner, Miriam Savage, was paying £8,200 a year in service charges and ground rent to the managing agent.

The losses often become apparent to families only when their loved ones die and they try to sell their home. There are 150,000 retirement flats in the UK. They don’t have full-time nurses but most have communal areas and features to help residents live independently. There is often 24-hour telephone support or wardens on site.

The properties are sold as leaseholds with the freeholds bought by the highest bidder. The freeholder collects an annual ground rent and appoints an agent to run the development. These companies have been accused of levying excessive fees and charges and leaving facilities to fall into disrepair.

Sebastian O’Kelly, of betterretirementhousing.com, said: “These flats routinely plummet in value and the reason is the leasehold system. The freeholder and property manager still get their ground rent and service fees irrespective of price. It’s deplorable that families are pouring money into these purchases, often in desperation, only to see their value evaporate.”

Retirement home builders say the value of the properties is not just financial. They say they reduce loneliness and the burden of maintenance and increase safety and security. McCarthy & Stone points out that since 2010 it has not allowed outside companies to manage its sites and this is protecting values.

Some families have concerns about how properties are sold. One complained that a 88-year-old relative was sold a flat while her daughter was on holiday. When the woman died, the flat wouldn’t sell. Land Registry data shows the average loss of value for flats in the block is £74,000.

The Times looked at nearly 500 retirement flats in 15 developments built between 2001 and 2015. Almost 80 per cent of the homes sold since their first purchase had fallen in value with an average loss of £38,846. The analysis suggests that flats built since 2010 have fared better with only 37 per cent experiencing losses. But one McCarthy & Stone flat built in 2015 lost £45,000 in value when it was sold this year. In the past four years McCarthy & Stone has made profits of £383 million.

Mr O’Kelly said: “The situation may be improving as builders move to being service providers but these companies successfully lobbied government to retain ground rents on retirement sites, which doesn’t encourage the belief they have a long-term interest.”

This week Churchill Retirement Homes donated £150,000 to the Tories. The company is run by Spencer and Clinton McCarthy, the sons of John McCarthy, the co-founder of McCarthy & Stone. There is no suggestion that the donation was linked to the decision to exempt retirement home providers from a ban on ground rents. Spencer and Clinton McCarthy have been Tory supporters for ten years.

The industry says the sale of freeholds funds communal areas and without this system flats would cost more.

Sources at McCarthy & Stone insist it is a different company to the one that developed homes pre-2010. FirstPort is responsible for maintaining the developments built before 2010. It said that nine out of 10 customers say its properties improve their quality of life. It added: “Independent research by the Elderly Accommodation Counsel in 2019 found that new retirement properties typically increase in value. The vast majority of our managed properties increase in price on resale and they are more than just places to live.”

“The billionaire and the 219 tiny flats: a new low for rabbit-hutch Britain?”

“Campaigners have piled in to criticise plans drawn up by a billionaire property tycoon to cram more than 200 tiny flats into an office building in north London. They describe it as a “human warehouse” that would be filled with people living in “cramped single-occupancy shoeboxes” like “rabbits in hutches”.

Amid claims that some of the planned flats would be as small as 15 sq metres – that’s less than 13ft by 13ft for residents’ entire living space – some locals say the proposal is one of the most shocking examples yet of the phenomenon known as office-to-residential conversion. A typical Premier Inn hotel room is 21 sq metres, while national space standards state that the minimum floor area for a new one-bedroom one-person home is 37 sq metres.

It was 10 years ago that, while London mayor, Boris Johnson pledged an end to “hobbit” homes in the capital, but examples of rabbit-hutch developments keep coming, and one leading architect told Guardian Money: “We’re heading towards the so-called ‘coffin homes’ in Hong Kong.” …”

https://www.theguardian.com/money/2019/nov/23/the-billionaire-and-the-219-tiny-flats-a-new-low-for-rabbit-hutch-britain?CMP=Share_iOSApp_Other

More Tory fake news – this time on housing policy

The Sun has this headline:

“Labour in La La Land

Jeremy Corbyn will force Brits to sell land at a fraction of the price so he can go on huge housebuilding drive’

https://www.thesun.co.uk/news/10389467/corbyn-seize-property-housebuilding-drive/

The reality:

Labour’s plan is for land to be sold to councils and developers at its value BEFORE planning permission can be applied for rather than as, at present, being sold AFTER planning permission has been granted.

That won’t please East Devon Green Party candidate Henry Gent, who currently stands to make millions of pounds on the option he has given to Persimmon to build hundreds of houses on his farm land.

If Corbyn gets his way, he would get only the agricultural value of the land – making it significantly cheaper to build houses.

They published their ideas in June 2019:

Click to access 12081_19-Land-for-the-Many.pdf

Kicked-out Tory Oliver Letwin understood the problem, but stopped short of offering a solution:

“Under the 1961 Land Compensation Act, councils are not permitted to buy agricultural land at its current value; instead they must pay a speculative “hope value”, based on the value of the land with permission to develop the site. That can easily make land more than 100 times more expensive than its actual worth. In his review of build-out rates (the report about the problem of land-banking that concluded that land-banking wasn’t a problem…), Oliver Letwin suggested that the residual land value of large sites should be capped at about 10 times their existing use value. Clearly better than paying 100 times the value – but does it go far enough?”

https://www.bdonline.co.uk/opinion/its-not-just-labour-thats-getting-behind-a-land-value-tax-/5099426.article

So this is both fake news and OLD news!

“Housebuilding data shows dearth of homes for affordable renting”

“The number of new homes classed as social housing and available at the cheapest rents from councils remained historically low at a mere 6,287, the second-lowest level in peacetime since council house building began in earnest in 1921.

The shortfall in new affordable homes is likely to fuel householders’ reliance on the private rental market. New research also published on Wednesday showed such housing is almost completely unaffordable in many areas for people who rely on housing benefit, which has been frozen since 2016.

In a third of areas of England fewer than 10% of homes are now affordable to welfare recipients, according to a study by the Chartered Institute of Housing and the homelessness charity Crisis. That meant increasing numbers of people were being pushed into homelessness or forced to live in emergency or temporary accommodation, the charity said. …”

https://www.theguardian.com/society/2019/nov/20/housebuilding-data-shows-dearth-of-homes-for-affordable-renting?CMP=Share_iOSApp_Other

PegasusLife service charges

PegasusLife now own the former EDDC HQ site in Sidmouth. A comment from the Guardian on the poor value of their retirement flats:

“.. you might be interested to know that another of these retirement property firms (Oaktree Capital-owned Pegasus Life) has just jacked up its monthly fees by around 50%. They did this around a fortnight before a relative of mine was due to move into a new build scheme, which is about a year behind schedule. Her monthly fees (for a one-bed flat costing ~£500k) were set to go from £600 to around £900. Absolutely outrageous.”

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

Record number of adults living with parents

“Record numbers of young adults in their 20s and 30s are living with their parents, according to official figures, with critics blaming soaring house prices and rents.

The Office for National Statistics (ONS) said that over the last two decades, there has been a 46% increase in the number of young people aged 20-34 living with their parents. Over the same period, average house prices have tripled from about £97,000 to £288,000.

In total, 1.1 million more young men and women are now living at home, with the number increasing from 2.4 million in 1999 to 3.5 million in 2019. …”

https://www.theguardian.com/uk-news/2019/nov/15/record-numbers-of-young-adults-in-uk-living-with-parents?CMP=Share_iOSApp_Other

Urban sprawl – Greater Exeter, Lesser East Devon

From a correspondent:

This correspondent had a beautiful sunny autumn drive through the villages of West Hill and Woodbury yesterday morning. Then the enthusiasm of conservative Cllr Philip Skinner for a “network of linked villages being built in the North West Quadrant area of East Devon” came to mind.

Has not East Devon sacrificed enough Grade 1 agricultural land to build Cranbrook? Were we not told that this sacrifice would be EDDC’s contribution to housing need?

Then we found that Ottery St. Mary was sacrificed.

Feniton was sacrificed.

Exmouth was sacrificed. I could go on.

And now we are told the villages of Poltimore, Huxham, Clyst St Mary, Clyst St George, Ebford, West Hill, Woodbury​, Woodbury Salterton, Exton and Farringdon would be most likely to be sacrificed.

Has the ward councillors of the above villages consulted their constituents? Are the constituents of Ben Ingham and Geoff Jung happy that Woodbury will join Cllr. Skinner’s “bigger vision”?

Why aren’t our independent councillors telling Exeter that East Devon has done their bit, they do not wish urban sprawl and it is now the other surrounding councils turn?

Affordable housing: cause and effect?

Do you think these two things might be linked?

CAUSE?

“Redrow hit by shareholder revolt over bosses’ bonuses and controversial new chairman”

… Former boss and founder Steve Morgan, 66, will still be entitled to bonuses, even though he has retired.

He has a 20 per cent stake in the company worth £422million.

There has also been anger at former chief executive Tutte, 63, becoming executive chairman, in breach of City rules for best practice in the boardroom.

Tutte is not considered independent enough because of his previous years at the company.

It prompted investor advisory services Glass Lewis and ISS to urge shareholders to oppose both changes. …”

https://www.thisismoney.co.uk/money/markets/article-7657339/Redrow-hit-shareholder-revolt-pay-controversial-new-chairman.html?

EFFECT

“Affordable homes built at ‘pitiful’ rate despite increase

The number of affordable homes built in Britain has risen for the second consecutive year but analysts warned that the current level of housebuilding remained woefully inadequate.

Sixty thousand homes classed as affordable were supplied between April 2017 and March last year, according to official figures. While this is an improvement on the 43,473 built in 2015-16, it is still below the ten-year average of 62,400.

Affordable housing includes properties for social rent, shared ownership and other intermediate tenures. In 2017 the government set up a £7 billion fund to increase the supply of affordable homes by 40,000 within four years. As chancellor, Philip Hammond promised £3 billion to fund an extra 30,000 affordable homes through the scheme this year.

Scotland supplied the most affordable homes per person last year, at about 16 homes per 10,000 people.

England produced 8.5 homes per 10,000 people, although this was an improvement on six per 10,000 people in 2015-16. At 47,100, the number of affordable homes built in England last year was below the long-term average of 50,800. Wales also dragged on the long-term average, while Northern Ireland and Scotland registered growth.

The government also promised that 300,000 homes a year would be under construction by the middle of the next decade to increase affordability, but the present rate is about 220,000. Analysts have warned that the government will only hit its target if it increases funding for affordable housing because it can no longer rely on the private sector.

Marc von Grundherr, director of Benham and Reeves, an estate agency, said: “Just 60,000 homes delivered in a year and no change in the level of social housing in a decade is pitiful.

“Affordability is an issue not just in the London market but nationwide, and an issue that is largely exacerbated by a failure to build more homes at all levels to keep pace with a growing population and an increase in buyer demand. We must build more and this, in turn, will help boost affordability.”

Last month L&Q, one of Britain’s leading builders of affordable homes, withdrew from the market citing a “serious downturn” due to persistent uncertainty surrounding Brexit.

Source – TIMES (pay wall)

Are homes in National Parks REALLY more expensive than in East Devon?

Owl is informed that a correspondent carried out some research on house prices yesterday, using Rightmove and Zoopla, because they thought – is the old chestnut that housing in national parks ismore expensive – or do the Tories et al use it just an excuse to do nothing?

It turns out, Cranbrook is already on a par with 2 bed terrace house prices within Dartmoor national park. In East Devon, Budleigh Salterton and Sidmouth prices are higher, but maybe they attract a premium already as coastal locations – the premium is said to be about an extra 10%?

Hopefully, this should mean that prices will not increase dramatically in this area if we were to gain national park status…

Over to you those councillors who want to keep a tight hold on planning and a very loose hold on developers …

Planning, dogs and tails: another correspondent writes

“The East Devon electorate were, indeed, hoping for a significant change by voting for an Independent Council and, therefore, it is frustrating to read such controlling comments from the Tory Councillor Philip Skinner (he who was responsible for the extending mahogany table fiasco and who lives in the rural village of Talaton which is not one of the proposed GESP Clyst Villages) stating that  ‘this is a really exciting project and I hope people grasp it with the enthusiasm, that I have so we get the good things for the area that we live in’!

Who are the ‘we’ he is referring to? Perhaps, not the numerous residents of the 10 rural  village communities of Poltimore, Huxham, Clyst St Mary, Clyst St George, Ebford, West Hill, Woodbury, Woodbury Salterton, Exton and Farringdon who appear to be the prime targets for his exciting large scale development? Living in the small, rural idyll of Talaton, he should be aware that those who have also chosen to live in rural village communities may not wish them to mutate into sprawling suburbs of Exeter and, therefore, many may question Councillor Skinner’s motives?
Yes – we all have to be forward thinking – but aren’t these 10 villages the very essence of the intrinsic nature and indispensable quality of East Devon? Some may be persuaded that the proposed idyllic concept of happy, peaceful, picturesque environments labelled ‘Garden Villages’ would be pure nirvana – but, unfortunately, the vision in planning terms is not always what you get in reality! 
 
Sizeable growth in this North West Quadrant, without adequate road infrastructure improvements in the surrounding districts, already results in the regular gridlock of the entire highway network! ‘The cart before the horse’ approach of continuing large-scale commercial growth and adding more people to the equation before the provision of an appropriate, sustainable transport system is an unsatisfactory method for success.
 
There is no doubt that we must do better with designing new communities than we have in the past and East Devon District Council Planners  are fully aware that there are lessons to be learned from pursuing misguided judgements and courses of action by barking up the wrong tree!
Hopefully, the Independents are canines with character strength and principled, with adequate bite at the sharp end! Dogs can control their tails but often wagging lacks conscious thought!  Canine body language is so much more than just tail movements, so to achieve control, it is very important to pay attention to other factors. Furthermore, excessive tail wagging  can often be associated with fear, insecurity, social challenge or a warning that you may get bitten!