Evidence based on sales since 2010
Evidence includes unverifiable discounts – ‘incentives’ – from the retirement developers
LKP refused to be associated with the report and urged non-publication
In spite of abundant evidence on the Land Registry of catastrophic falls in value of retirement properties, today (August 20 2019) the Elderly Accommodation Counsel reports that newer properties have increased in value.
The report is based on a limited number of sales since 2010.
However, it acknowledges that the trend for resales of properties bought between 2003 – 2009 would have gone down.
A recent example of consistent falls in value is Bridewell Court, in Widnes, Cheshire:
Family save £25,000 over McCarthy and Stone shared equity lease, thanks to Better Retirement Housing – Better Retirement Housing
A family selling a McCarthy and Stone retirement flat with a rip-off lease condition have been saved £25,000 after the case was taken up by Better Retirement Housing. Rita May Bailey, who is now deceased, bought the one-bedroom flat at Bridewell Court, in Widnes, Cheshire in February 2008, which has a registered price of £167,450.
LKP was a member of the consultative group to the report, but when we were shown a draft we urged non-publication.
We stated:
“We do not endorse this report, which serves the interests of the lobbyists for an unreformed retirement housing sector. We urge the EAC to reconsider its publication.
“At a time when the government and Law Commission are considering wide-ranging reforms to leasehold as a result of abuses of the system by plc house builders, we are surprised that EAC is involving itself in analysis of unverifiable incentive data from retirement house builders …
“It is a backward step from the EAC’s examination of 994 Land Registry sales data in September 2017, which found that 51% of retirement properties built and sold between 2000 and 2010, and then sold again between 2006 and 2016, suffered a loss in value.”
We added:
“As a consumer group, we are extremely wary of house builders’ claims concerning the value of incentives that supposedly account for up to 10% of the value of new retirement properties.
“As this information is not in the public domain and is not verifiable, it should be discarded.”
In the original report the EAC suggested that “HM Land Registry considers including information on financial incentives within their ‘Price Paid’ data set, so this information is available for consumers”.
We strongly opposed this notion, and added “we have no doubt that the Land Registry will dismiss this suggestion, which would be in direct opposition to consumers’ interests”.
The EAC’s idea of nobbling Land Registry data on the say-so of a commercial house builder, thankfully, appears to have been dropped.
We are also concerned about the uncritical referencing of part-exchange sales, which formed part of the 2012 Channel Four Dispatches investigation into retirement sales.
This programme was unaccountably absent from the EAC research.
So was any reference to the work of Carlex / betterretirementhousing.com and LKP itself.
And the parliamentary debates referencing dismal retirement housing resales.
We told the EAC inn February:
“Volume house builders have a poor track record in resales because their strategy has been to sell on the freehold income streams, and the more questionable management related income streams, and move on.
“This strategy has inevitably given rise to controversy, and damage to certain house builder brands.
“While your report correctly references the Law Commission’s observation that reform to the sector would “improve consumer confidence”, it ignores issues that have undermined consumer confidence.
“There is no reference to the two Office of Fair Trading reports into the sector, the finding of collusive tendering by Peverel / Cirrus – exposed by us – and the £100,000 “goodwill” payments to settle this issue.
“There is no reference to Carlex / BetterRetirementHousing.com, why it was founded and why MPs supported it, and subsequently the Leasehold Knowledge Partnership, in one of the largest and most active All Party Parliamentary Groups.”
The report contains very familiar digressions about the desirability of retirement housing – avoiding early dependence on health and social service; ameliorating isolation and loneliness etc – none of which are relevant to discussing resale prices.
Press Release Executive Summary Resales Report – Full
Related posts:
Huw Merriman calls for zero ground rents for retirement leasehold at prime minister’s questions
The Times: ‘Exit fees and poor resale values: the uncomfortable truth about retirement homes’
BetterRetirementHousing.com reports retirement resale disasters. On BBCR4 MoneyBox today
My granny’s Audley Retirement home ‘was a money pit’ costing £48,000 in exit fees
Should you buy a leasehold retirement flat, asks Telegraph
LKP saves family £25,000 over shared equity McCarthy and Stone lease
A family member purchased McCarthy & Stone 1 Bed Flat in 2004/5 for £135K
Today Sold Subject to Contract £95k.
Two bed in 2004/5 sold for £183k now selling for £130K same development,
This is similar to my development in 2013/14 2 bed flat sold for £118k now 3 up for sale belowb£100k.
The factor for each is Firstport Retirement as Managing Agent.
Now The EAC no longer receives Government funding,who may I ask now funds them?
Surely not a “vested interest?”
Chas, You are right to point out the correlation between poor re-sale values and Firstport management.
Clearly it was not without reason that McCarthy & Stone dismissed Firstport as managing agents from all the McCarthy & Stone developments that Firstport connected companies did not hold the freehold for?
It tends to be the case that in general successful companies offer better customer service.
It is the financially struggling ones that have customer issues.
In their last published accounts the Firstport division that manages the retirement developments chalked up a loss of £5,381,000!
McCarthy & Stone (M&S) I believe had a policy, of selling the freehold on developments within a 2 years period to a subsidiary company Fairhold, part of the Tchenguiz Family Trust. Residents were not offered the Right of First Refusal as the company purchasing was part of the same group.
It has been stated M&S were able to claim back the VAT they paid on materials if they sold the freehold within 2 years of commencing the build. The right to purchase the freehold for a figure that was acceptable had been lost.
The ground rent in 2004/5 was circa £520 a year and rent for the Residential House Manager Flat was £11,000, later reduced when Fairhome was approached as the residents considered the rent was too expensive.
Fairhold agreed to drop by £1,500 which was accepted. This was the wrong way to go as if they had gone to the LVT at the time now FTT they could have had it dropped closer to the local area flats that were being rented for less than £6,000 a year.
Also as they agreed to the drop they could no longer use the tribunal as they had already agreed on an amount, even though it was considered to be over 15% above local rents in the vicinity.
I wonder if the EAC has factored in property values for retirement developments that originally benefited from having a residential manager, and those that “voted” to change to a visiting house manager?
Absolute rubbish….I have worked for various large and reputable estate agents in London (for more years than I care to mention) & throughout all my years working within Estate Agency, there has NEVER been a single ocassion whereby a retirement home owner has EVER recouped the sum paid for a retirement home, let alone made a profit!!
Retirement homes are generally marketed 50% more than the market value of a similar brand new flat on the market, yet sells for 50% less than another flat (e.g 1 bedroom flat) when on the 2nd hand market (due to the excessive maintenance fees PLUS 1%-5% resale commission that has to be paid to the management company of retirement flats even If the retirement management company don’t actually sell the property and an estate agent successfuly sells the property!!)
Any experienced estate agent will tell you the same!!
Fiona
Your post which stated you have NEVER been a single occasion whereby a retirement homeowner has EVER recouped the sum paid for a retirement home, let alone made a profit.
The McCarthy & Stone Developments have additional items such as:
Lounge
Kitchen
Corridors
Laundry
Lift
These are selling points that are not included in the re-sale value. Most Retirement Flats have a minimum of 60 years of age to secure living there. The average pensioner lives to be, men 82 and women 88 and are normally purchased as a Retirement Home. This means there is a long period from 1st sale to the next.
In my case, the value of my relatives Flat had dropped by 40% within 7 years to my knowledge. A Retirement Flat in close proximity which I own was first purchased in 1986 for circa £32k. A similar Flat was recently sold for £105k and in 2015 one sold for £117k.
This is fact and can be checked, so not all none McCarthy & Stone Flats are effected by the additions and to lump them all together does nothing for Retirement Developments.
The main problem is the Managing Agent and the Landlord who can be part of the same group of companies. Freeholders are by Law not supposed to make a profit from Service Charges. To get around this Freeholders employ Landlords who employ Managing Agents who can and were supposed to send money back to the Freeholder.
Some Landlords became greedy, so the Freeholders introduced Agents such as E&M to recoupe the money and reduce the Landlord ability to profit.
Chas
I can genuinely say with 100% honesty NOT 1 single retirement property that I have EVER come across in over 30 years (Countryside Group, Barnard Marcus estate agents and Kinleigh Folkard & Hayward), has recovered the price paid for the property….but, if you have successfully recovered the monies paid, CONGRATULATIONS! However,having sold Mc Carthy 2nf hand retirement homes, I do believe that our example may be an exception to the rule and could NOT represent 1% of other retirement properties.
In relation to your advertisement listing items as a selling point in your example e.g. communal lounge, laundry area etc, I’m NOT sure what your point is….as, we have small basic retirement developments with far more than you specify and exceptional/superior retirement properties with onsite hairdressers, restaurants, chauffeur driven drivers on call, numerous classes and 24 hour doctors and conseirge and the list is??
All the retirement properties have proved challenging to sell, which is NOT a reflection of the amazing service & marketing thatthese estate agents provide….but a reflection of high service/management charges OR solicitors strongly recommending against due to sale charge levied upon a sale (despite the development NOT being involved and obviously having to pay a REAL ESTSTE AGENT for their services!
If a freeholder has a problem with a management company instructed, they have the ability to install preventative measures!!
You make me laugh, you make complaint about E&M for their excessive service charges, YET FREEHOLDERS PROVIDE NO SERVICE FOR GROUND RENT….a prime example of pass the buck & pure hypocrisy!!
I have heard that a vast number of freeholders only employ particular insurance companies to provide block building insurance policies …on the basis on receiving a kickback from insurance companies!! If, this is true, freeholders should be made to declare all income and it should be passed back to leaseholders, as they are paying the premiums OR better still involve a prison sentence for fraud!!
LEASEHOLDERS are being stitched up from all angles!!
Chas
Please provide the full details provided in your examples…as, I would like to check the evidence myself.
Thank you
Fiona
Fiona,
I may have inadvertently misled you regarding the development I have a flat in.
It was never a McCarthy & Stone Development but Peverel Retirement was our MA.
The landlord was Meridian Retirement Housing Services Ltd who was a Peverel Group Subsidiary. Meridian was replaced by another subsidiary being Flatlaunch Ltd and Peverel became Firstport Retirement, with some directors in common and linked to the Tchenguiz Family Trust which includes McCarthy & Stone.
The point I was, trying to make was some Retirement Flats that do not have the items I mentioned and you added too.
The problem is the additional items mentioned are a premium added when first purchasing. The facts are then reflected when next sold. It is similar to purchasing a Motor Car as the minute you drive it away it will have lost 20% of its value which was paid as VAT.
Checkout Right Move for SY6 6EW this will provide a list of flats and the prices paid over the past 20 years.
Chas
I have checked the information supplied against the evidence provided on rightmove & it would appear that 20 Ashbrook Court was purchased for 115k, but sold for £107 (2016) and has therefore made a lose. However, to be fair, there are examples of properties that appear to have made a profit (albeit. minimal) over 15-20 year period.
Therefore, I feel that it is fair to conclude that as long as a retiree lives for this period, they might at a first glance make a marginal profit. On a positive note, life expectancy is increasing, but on the flick side such longer life expectancy would result in substantial high service & maintenance costs as opposed to
an alternative/Non retirement property has generally increased in capital value of 200%, over the same period and involve substantially lower service charges PLUS 1 property sales fee (rather than a retirement property which generally attracts a development sales fee, for not selling a retirement property PLUS estate agency fee – for actually selling the property).
I can appreciate that retirement property may appeal to individuals that are vulnerable (retired individuals with mobility issues and little no family support), however I feel that such vulnerable people need enhanced protection from freeholders and managing agents.
I have sold various retirement properties with both limited and extensive facilities (following extensive periods of marketing) & we have never obtained the original price paid, only on this type of properties. There is however a slightly higher demand for the higher end luxury retirement properties, than basic retirement properties. I believe the reason for the higher demand for luxury retirement is because people are working for longer & retirees really want to reward themselves (rather than living frugally as they may have done in the past) PLUS moving into to retirement later, can result in complex health issues and therefore they want a 24 hour doctor and facilities on site/press of a button.
Im not sure that I would compare a car to property, as I have sold numerous new properties 2nd hand (e g. Purchased off plan and sold upon completion/being built for £250k more, 18 months later. However, my understanding of cars is that you drive them off the forecourt and it has depreciated. The vast majority if homes increase over time, yet the majority of cars depreciate further.
Fiona,
I also checked on number 20 Ashbrook Court again and noted you mentioned this one flat but forgot to mention the others 27 which over the period mentioned some had, in fact, trebled in price.
In fact, one flat sold in 2016 for K105k and another in 2012 for £117k confirming my version my posting.
Fiona, you also posted:-
You can appreciate that retirement property may appeal to individuals that are vulnerable (retired individuals with mobility issues and little no family support).
This is so far off the mark as to be considered rude and ignorant and does not reflect the makeup of the lovely residents that chose a beautiful development with outstanding views.
The MA Firstport Retirement is crap, but hopefully will soon be removed.
Million of pounds of assets have been stripped from pensioners or families in re-sale values. As stated above the developers build ,sell, then walk away.
There`s plenty of loss making McCarthy & Stone (M&S) developments if you look on Land Registry.
Laurel Court, Stanley Road, Folkestone has lost over £1.5m. With some flats losing £90,000 each.
Kingsley Court, Windsor Way, Aldershot. Another development to lose over £1m on re-sales.
There`s plenty more if you research. Flats sold in the late 90`s bare achieve their selling price back then. The ones that do fail miserably to track house price inflation over the same period. The developers have every excuse in the book. When they by chance make a small profit, it praises the value of them. When they make a loss, it`s due to a lifestyle choice. Whilst the developers blame the financial crash in 2008, this is utter bullshit. Property prices have recovered the pre 2008 values and now we are talking 2019 where prices have remained buoyant in the UK on the whole for last 6 or more years.
My father who had a flat in one of those development died 4 years ago. The flat still remains unsold 4 years later. 4 years of service charges, ground rents and council tax. Price bought £161,000, on the market now £59,000. Can`t be sold for love nor money. No demand and the outrageous £580pcm service charges puts off potential buyers. There are a constant 17 or so flats there for sale.
Fairhold and Firstport conspire to add work that isn’t required, like a spanking new fire alarm system for £129,000. The flats were only 10 years old. Other tricks include getting around Section 20 process on consultation of works stating “delays” in order to get the residents to not go through S.20 and appoint the “preferred contractor”. This cost the residents £13,000 just to change to LED light bulbs and on the savings so far another 13 years to recoup the cost!
A Washing machine replacement £2840.40 when it can be bought online for £1900.
FirstPort Purchasers Information pack. Just copy documents of (Fire risk
assessment, asbestos survey, service charge budget, buildings insurance specification etc etc) that are provided within the service charge fees and have a right to get a copy of as leaseholder under Section 21 LTA
1987.
What a rotten industry!
Chas
It is very disappointing to think I was debating an issue with an adult, to then find that instead I’m dealing with someone with childlike qualities e.g. fails to 100% prove his point, which then results in him misreading my response for his preferred response, subsequently throwing his toys out the pram and drawing on personal insults.
Firstly I did NOT state older people with disability issues with limited support SHOULD live in retirement developments, I stated that I understand, why such properties MAY APPEAL to individuals !!
Likewise, I can appreciate that large private developments with gym, sauna, spa, swimming pool, vertual golf, cinema with views that overlook the Thames etc MAY APPEAL to other people. However, regardless of the type of development that someone may live on, there is no point paying for such such facilities and not using such facilities….and therefore, if you would use such facilities, the development would have greater APPEAL . Therefore, it would not be wrong to assume that a person that would be attracted to luxury retirement property that offers 24 hour doctor on call, chauffeur driven car, hair dressers, in house classes, restaurant etc this type of property and would therefore APPEAL to…. is an older individuals (development is age specific), that is less able to use outside facilities (that offers a similar product but is more competitively priced) & is therefore less mobile who may not have immediate or extended family nearby (you, have to remember that lots of family members, may have had to move out of the area they grew up in, due to property prices, work commitments etc, partners & cost of raising a family) they can/wish to rely upon.
It is clear, that in differing geographical locations, retirement purchasers have differing needs and requirements. There are costs involved with all developments (regardless of whether there are facilities or not) however the more services the higher the annual service charge. However, when a retirement properties service charge is substantially more than other similar non retirement properties, the management need to provide answers to justify such costs.
In relation to the purchase price paid and the sales price achieved, it would appear that retirement properties very rarely obtain a capital gain over a 15-20year period (and, if they were to make a marginal gain, it is generally wiped out by the freeholder applying a %fee when the property is sold, despite NOT providing any assistance in such property sale). However, a non retirement property would have probably made a 200% gain over the same period and would not incure the same development home sales fee applied by the retirement freeholder.
I appreciate that everything in life is NOT about money, but the stress, arguments and resentment within a family, whilst desperately trying to sell a retirement home can be catastrophic (and I have witnessed the tears first hand, simply because people are at breaking point) and having to find the monthly management fee, whilst paying your own household builds.
Fiona sorry you are disappointed.
Your postings were interesting and showed the facts M&S flats were subject to large financial losses when re-selling for the first time.
You were debating an issue with an adult, but to say I failed to 100% prove my point, also for your information my pram was sold years ago along with the toys.
It was not really fair when you mention one flat out of 28 in isolation. One flat number 20 had lost money, but to ignore the other 27 that had increased in price, some by 66%.
Example the flats were originally for sale circa £38k when purchased 1986 flat 24 later sold for £117k shows an increase of 68%. Another flat which was not mentioned had been sold on 5 occasions:-
1986 £38k
1997 £45k
2002 £80k
2008 £105k
2015 £105k
This same flat is now up for sale for £125k
Your posting as you say “may appeal to individuals” was understood but said again in isolation of all the other reasons people over 60 choose to live in retirement developments.
So sorry if you were upset and decided to reciprocate but to say even “may” was in my opinion, not required to enhance your argument.
Having owned the flat for 13 years and in good health as are many of the residents some into their late nineties, also felt it was an unnecessary comment to make.
Please accept my apologies if you were upset by my posting.
Chas
I’m not upset by your post, simply disappointed.
PLEASE READ MY POSTS AGAIN, THEN READ IT AGAIN I did NOT ignore the fact that some properties within your example had MADE INCREASES OVER A 15-20YEAR PERIOD!!!! I would strongly recommend that you seek medical assistance, as you CLAIM to be in good health, yet such statements you make indicates otherwise & raises serious question /concern, as to your health.
If, you repeatedly keep misreading statements & then relay such incorrect information to others, I’m not surprised my comments are perceived negatively.
Enjoy your retirement & I wish you good health.
Fiona
Wow, Fiona true colours showing through, shame, it was an important thread.
Chase
Yes, your true colours are showing through, as any decent individual would apologise for REPEATEDLY MISREADING my statements & making PERSONAL ATTACKS on others, when they fail to successful achieve their point, but NOT you!!
Fiona
Both sides have made their point and therefore no need to continue.
It is impossible to take the moral high ground, when you fail to apologise when your behaviour is unacceptable!