Yet again retirement housing is in the news: this time Retirement Villages charging £50,000 in exit fees to a family who sold a two-bedroom flat at Mayford Grange, in Woking in Surrey.
The Sunday Times ran the story yesterday, although Retirement Villages, which is a member of the Association of Retirement Community Operators, makes its exit fees, which can be as high as 12.5%, clear on its website.
Nonetheless, the family of Hannah Stuart are indignant. She paid £380,000 for a two-bedroom flat at Mayford Grange in 2010.
They sold it for £425,000, which means that they walked away with a monetary loss of only £5,000. This is not that bad in retirement housing, where resale prices can be catastrophic.
The issue is discussed on www.BetterRetirementHousing.com here:
Family outraged by £50,000 exit fee at Retirement Villages’ Mayford Grange – Better Retirement Housing
But a cash loss from purchase of only £5,000 is not THAT bad, in UK retirement housing … By Sebastian O’Kelly Yet again retirement housing is in the news: this time Retirement Villages charging £50,000 in exit fees to a family who sold a two-bedroom flat at Mayford Grange, in Woking in Surrey.
“Retirement flat miraculously only loses £5,000 on re-sale”
Whether the exit fees go to the freehokderbir service charge fund is not the issue .
Provided it is made patently clear what the formula is for calculating the exit charge before the lessee contracts to purchase the lease then it is reasonable to assume that the burden of this commitement is reflected in the price paid .
It is acknowledged it was made clear what the charge would be
Bleating about such an exit charge now undermines the campaign for leasehold reform on other matters where abuse has taken place and legislation is required
No. It is essential that defined services are specified in the lease to as great a degree as possible and that monies are raised to pay for them.
Otherwise services you think you are paying for, with annual service charges or the exit fees, might be – and have been – reduced.
Retirement community operators are complicated service businesses, where the units are, to date, sold as leases.
Hard luck for leasehold sector insiders, that the trade body representing them, the Association of Retirement Community Operators (ARCO), says there is no place for ground rents in retirement or any other housing.
The membership includes rather more socially inclined members than the standard house builders, thankfully.
You have changed the argument to ground rents. The discussion was on the matter of exit fees.
In any event if the value of the ground rent is calculated using a defined discount rate set by the government the purchaser can decide whether the premium for the lease and the NPV of the ground rent makes for an acceptable deal.
Exit fees and ground rents have a place provided they a clearly set out and valued in the terms of the lease . The 19 year doublers got through because of the value of that obligation was not disclosed . If the value of 10 year doublers was discounted using a defined discount rate and shown next to the premium in Box LR7 they would have been rejected by the purchaser or a substantial reduction made in the premium
Address the event fees issue: it is surely good that services are defined and monies allocated, rather than simply going to the freeholder to spend as he wishes?
If the event fee goes straight to the freeholder – that is not a problem PROVIDED it is clearly disclosed in the lease so that a proposed purchaser can take advice on its implications when making an offer
I am going to come round to your house, break in and take all your possessions. I will then go to your bank and take all the money out of your account.
Since I have disclosed this to you, and you are now fully aware of this, does that make it right?
The anolgy is clearly wrong
You are proposing to take steps which are clearly illegal and trying to argue they will not be illegal as it is disclosed in advance
In the case of the granting of a lease you are offered terms all of which are legal
I fail to see the comparison
I agree with Stephen, they are both robbery but one of them is legal.
Stephen, Tis still the season of goodwill. As such I wrote my last post so that finally after all your postings someone, somewhere might agree with you!
How does it feel?