By Harry Scoffin
Influential crossbench peer Lord Richard Best told the Homes UK conference in London’s Excel centre yesterday that retirement housebuilders need to up their game following devastating reports last week in both The Times and The Guardian.
Both newspapers drew on the work of LKP’s sister organisation www.BetterRetirementHousing.com to condemn dismal resale values of retirement properties: a scandal known and ignored by many organisations involved in the sector.
Sebastian O’Kelly, of betterretirementhousing.com, told The Times (click for full report):
“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.”
Asked by the moderator David Orr, associate director for housing, Centre for Ageing Better, to address “insecure leasehold tenancies”, “spiralling service charges” and “dire resale values” in retirement housing, Lord Best said he sympathised with consumers affected by such issues:
“The amounts of scams and loopholes exploited within the leasehold law is an absolute disgrace,” he said.
Lord Best is chair of the Affordable Housing Commission and the All-Party Parliamentary Group on Housing and Care for Older People.
He told the conference that retirement “housebuilders will not do anything unless they are made to do it.”
“Voluntary good works is not on the agenda,” he added.
The crossbench peer said that housing an ageing population required the private sector to be delivering 30,000 new homes a year:
“And what have we got?
We’ve got McCarthy & Stone doing about 3,500-4,000 homes a year, and a few others. It’s 6,000 homes a year. Not 30,000. We’re not doing enough.”
He suggested that the retirement housebuilders are not currently “providing a quality that we’re looking for”.
“Like everybody else at my age, we talk endlessly, my other and myself, about downsizing but we don’t actually to do it. There’s always a reason not to. The options out there, available to us, what’s on offer, we don’t like the look of… We just hang in there.”
When Tony Cross’s father was the first buyer at a McCarthy & Stone retirement development in Folkestone, Kent, he thought he was getting a bargain. The sales rep offered him an “early bird” discount, knocking £3,000 off the cost of a one-bed flat, selling it to him for £161,950 in 2007.
Main Times article by Andrew Ellson
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 housebuilder
Freeholds generate millions
Construction companies and their executives have generated huge wealth by selling leasehold retirement homes.Several well-known businessmen and their families, including Vincent Tchenguiz and William Waldorf Astor IV - David Cameron's brother-in-law - also own or control the freeholds to many of the
£200,000 flat sells for £25,000
Families have told of their devastation at realising the scale of losses on retirement homes bought by their friends and relatives over the past two decades. Francine Savill, 72, said that she was horrified after the estate of her friend lost nearly £200,000 on her property.
Developers nobbled government over ground rent ban
Developers of retirement homes fought hard for the right to be exempt from rules which clamped down on other builders. Their lobbying managed to convince the government that retirement homes should not be covered by regulations which banned the outrageous leasehold terms on other new builds that had
If the measure of a civilised society is the way it treats its vulnerable citizens then our investigation into the experiences of elderly people when they purchase retirement homes from certain developers paints a depressing picture of modern Britain. Some buyers of new-build retirement flats have b
Lord Best also told delegates that the regulation of managing agents and the introduction of a new, more transparent service charges regime is still happening:
“I have just finished doing work for MHCLG on regulation of property agents. Managing agents take commissions sometimes and take charges for all kinds of stuff. We need a regulator.
Government is committed to there being a regulator sooner or later, who can make sure that on service charges you get what you pay for.
I think £8,000 [a year] sounds way over the top. But people always forget that they get something they are paying for and didn’t really notice. When you’re looking after your own home, you’ve got maintenance costs, higher heating bills, a load of stuff a service charge can, in theory, relieve you of. But if you’re paying something for nothing, you need a regulator to really clamp down on it.”
High service charges are not only an issue on retirement schemes, Lord Best said.