An analysis of Land Registry data has shown that three-quarters of the flats built by Churchill Retirement – owned by the McCarthy family who founded McCarthy and Stone – have resold at a loss, according to The Times.
The average fall in value has been 18%, or £43,000, the newspaper said, with one flat in Leatherhead, in Surrey, bought from Churchill Retirement in 2016 for £495,000 selling five years later for £290,000.
Only a quarter of Churchill Retirement flats resold for profit, with an average gain of 10% or £23,000.
Repeating a business model pioneered by McCarthy and Stone, Churchill Retirement sells independent living leasehold flats, with a part-time housemanager and some communal areas such as a lounge and kitchen.
Service charges average more than £4,000 a year, and ground rents were above £500 a year until they were banned from being in the leases of new retirement flats after 1 April this year.
The average buyer of a Churchill Retirement flat is a woman aged 79 who lives in the home counties, according to the newspaper, which added:
“It is far from the only developer to see the value of such properties fall.”
The report continued:
“With more than 4,000 homes built by Churchill yet to be sold by their owners, thousands of families are sitting on significant losses that they probably have no idea about.”
The newspaper reports that over the past five years Churchill Retirement has made pre-tax profits of £173 million.
The analysis looked at nearly 5,500 Churchill homes listed on the Land Registry website since 2000. It found that 1,400 of these properties had resold at least once after they were first purchased from the company. Their collective value fell from £328 million to £291 million, a loss of £37 million, the newspaper reports.
It claimed that had the properties increased in value at the same rate as flats in their local markets, they would have been worth a collective £400 million, an increase of £72 million.
“This means that the owners of Churchill homes who have sold already are effectively £109 million worse off, about £78,000 each,” the report said.
Sebastian O’Kelly, of LKP and Better Retirement Housing, which campaigns for improvements to the industry, is reported in the article saying:
“Retirement flats have plummeted in value from new as evidenced on the Land Registry. A reason is the leasehold system along with high fees and service charges that leaseholders have little to no control over.
“The truth is that the developer, freeholder and property manager still get their ground rent and service fees regardless of the property’s value so there is no alignment of interests. It’s terrible that families are ploughing money into some of these flats, only to see the value evaporate. And it’s a huge shame because families desperately need this sort of housing for older relatives who are bereaved or need the support network of close neighbours.”
Churchill Retirement is reported in the article for claiming it had among the lowest service charges in the sector, and is quoted:
“Whilst everyone wants the best resale price for their property, our retirement communities are about far more than just the cash return on the bricks and mortar. In buying these properties, older people are investing in a safe, sociable place to live where practical help is on-hand and where they can continue to live independently in their own home among friends as they get older. This range of affordable benefits and the quality of life these deliver have immense value for our customers, particularly those whose family may live some distance away.
“As with all retirement properties where you have an age-restricted market, the performance of resales is based on a range of factors including the condition of the property, the way in which it is marketed and the urgency with which the family or executors are seeking a sale. We are there to support our customers in getting the best value for their property.
“While many other companies prohibit owners from renting out properties, Churchill has established a buoyant rental option for people wishing to sublet and we have seen strong uplifts in value in many of our developments.”
The full article can be read here: https://www.thetimes.co.uk/article/retirement-flats-life-savings-value-homes-housing-market-uk-2023-f6xx5hd6k
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