Gavin Barwell urged greater transparency over retirement exit fees as the Leasehold Advisory Service “annual conference” yesterday.
“More than one in 12 people in the UK will be aged over 80 by 2039, according to the National Office for Statistics.
“The UK’s population is set to rise by over 4 million in the next decade, and by 10 million in 25 years – driven in part by an increasingly expanding older population.
“So it is important that there is greater transparency around ‘event fees’ charged in the retirement leasehold sector that can help to defer service charges so older people can ‘enjoy now and pay later’.
“Fees apply when an older person sells or sublets their property, which can affect older people at a vulnerable time in their lives. That’s why we asked the Law Commission to undertake a wide-ranging review of event fees.
“The Law Commission is preparing to publish its final recommendations by April 2017.
“This will promote greater transparency over the disclosure of event fees at the point of sale and remedies for consumers where landlords, or their agents, fail to disclose event fee information.
“Greater transparency over the use of event fees will make a significant difference in helping to re-establish confidence in the residential retirement leasehold sector and release the current stalling on new supply in this sector.
“However, we can always do more and I am very keen to explore how we can promote greater transparency, fairness and efficiency, and to work with consumers and the sector to improve leaseholders’ experience of home ownership.
Sebastian O’Kelly, of LKP, asked a question of the minister from the floor:
“Minister, are you aware that the retirement exit fees can be extremely complicated.
“I’m dealing with a case at the moment of a widow in an upmarket retirement who has run out of money.
“But the exit fees amount to £72,500, so she can’t afford to move and she can’t afford to stay. I have exhausted looked over the website of the housebuilder concerned, and there is no reference to these exit fees at all.
“If you want a healthy retirement housing market, I think you are really going to have to nobble issues like this.”
Mr Barwell replied:
“The fundamental principle of exit fees works for many people: they go into a nice environment that they may not be able to afford in income terms, yet pay later at the end.
“But it has to be absolutely clear on what terms they are entering.
“The Law Commission has been very useful in working up our ideas in this area, and we look forward to its report in April.”
Rather than making Exit Fees transparent why not abolish them altogether and just charge the Service/Management fee.
Service /Management fees can be substantiated as they should be based on actual costs/invoices.
Exit Fees are a figment of the Freeholders imagination designed for profit motives only.
By making them transparent to a purchaser only makes it a take it or leave it situation.for elderly people who really need this type of accommodation.
If we all lived for ever there would not be any income from Exit Charges in Retirement Complexes. So really it is a charge for dying.
Actually service/management fees are also a figment of the freeholders imagination….all too often.
The legal fees to sort out the management fees are so high, most people just prefer to quietly pay the freeholder and move on.
Exit Fees should be considered as unfair contract terms.
Peverel Retirement now trading as Firstport Retirement use the Information Pack (IP) which they charge circa £308.00,
This is really an Exit Fee!
This is a charge paid by all, including those who pass away or decide to sell.
The IP contains information already available when a new leaseholder purchasers.
What leaseholders do not know is they pay twice for this IP as the production of this literature is included in the Management fees everyone pays, see literature produced by Peverel Group up to 2015 then watered down by Firstport who state they no longer charge???
You end your comment with the words “So really it is just a charge for dying”
Were you aware that when the Tchenguiz group companies financed his portfolio part of the assets giving rise to the valuations actually allowed for people dying as their deaths gave rise to exit fee income?
A death in a retirement development that Tchenguiz Group companies had an interest in were also flagged up as an opportunity for Retirement Homesearch to generate a sale!
Michael, so I assume that Peverel would never have promoted a healthy lifestyle, as it would only delay an income from Exit Fees and Sales Fees.
The Tchenguiz toe rags should have banged up for ‘something a long time ago in my opinion. Pity that the FSR bungled the arrest several years ago.. I have recently been made aware that one of their ‘Regional managers’ ( Hench Men/ women) harassed and terrorised an elderly woman ( 80’s) to pay upwards of 17’000 as her share of the ‘ Major works’ in a block of 30 flats in East Sussex full of elderly folks with a bit of cash! Scum.
LKP will be in touch with the Minister in the near future to explain we do not believe
“fundamental principle of exit fees works for many people: they go into a nice environment that they may not be able to afford in income terms, yet pay later at the end”.
It may be true in a small number of cases but for many people it is an enforced gamble. The Law Commission may have accepted this but they have provided no evidence to show this is the case.