The Times today (September 10 2016) reports the research into re-sale values recorded on the Land Registry for retirement properties.
The article, headed “Exit fees and poor resale values: the uncomfortable truth about retirement homes”, quotes LKP patron Sir Peter Bottomley, who earlier this week established the All Party Parliamentary Group on leasehold and commonhold, saying:
“People who buy retirement properties should expect that they will hold their value; too often this is not the case.”
Campaign against Retirement Leasehold Exploitation looked at the resale prices paid at a random selection of sites by providers McCarthy and Stone, Churchill Retirement Living, Audley, Retirement Villages, Retirement Security and Pegasus.
It reported a fall in value of £164,188 of a McCarthy and Stone flat at Risingholme Court, in Heathfield, East Sussex, from its original purchase price of £225,688 in April 2008.
The resale price was £61,500.
Campaign against Retirement Leasehold Exploitation has asked both McCarthy and Stone and Churchill Retirement Living for data that demonstrates price increases at sites constructed between 2000 and 2014.
Related posts:
DCLG stakeholders hear of ‘calamitous’ Law Commission report on exit fees
Huw Merriman calls for zero ground rents for retirement leasehold at prime minister’s questions
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
The Times reports that families ‘lost £3 billion’ on resale of leasehold retirement flats, while developers and freehold speculators made millions
Oxford council leaseholders each facing £50,000 bills head for the courts
The Times September 10 2016) reported, research by the Campaign against Retirement Leasehold Exploitation into re-sale values. The article, headed “Exit Fees – Poor Resale Values:
I recently posted similar information regarding a McCarthy & Stone Development built 2005/06. A One Bed Flat was selling for circa £135k in 2006, Two Bed Flats for £180K.
Recently in early spring 3 One Bed Flats were on sale in the same development for offers circa £75k? What is strange is soon after the posting, I was informed by an Estate Agent that the three One Bed Flats I had mentioned had over night, increased to £109k each and later sold. I asked at the time was this a conspiracy as the 3 flats increased 31% each.
The Freeholder is now Fairhold 7, purchasing 56 flats within a short period after completion. The Landlord is Estates & Management, with Managing Agents Peverel/Firstport Retirement. Those elderly pensioners purchasing the flats, are unaware of the drops in value.
The flats that have lost most value, have Lifts, Communal Rooms, Laundry’s and Corridors with Stairs. It seems the flats original purchase costs, includes these addition items, which are not part of the re-sale.
Don’t forget the original value would have been used as a valuation for re-mortgaging. What would this development be worth now?
I have re-checked at the local development and some of the information I was provided, needs adjusting.
1. The development was built in 2003/04 not 2005/06
2. The most expensive flat was sold for over £188k not £180k
Flat 40 One Bed
Purchased for £130k – 2005.
Sold for £62k – 2010
Flat 47 One Bed
Purchased for £129k – 2007
Sold £75K – 2014
Flat 24 Two Bed
Purchased for £187k – 2004
Sold £125k – 2011
Cheapest 1 Bed Flat – sold new 2003 – £95k.
Dearest 2 Bed Flat – sold new 2004 – £187k.
Information from the Internet
This was in the Daily Mail by Richard Dyson 28/10/2012
Précis:
Investigation:
The grim reality of care home sales.
Research looked at these properties, then identified other flats in same developments sold within the past 12 months, where Land Registry records existed for another, previous sale. This showed how values had changed over a specific period. Records existed for properties in 11 of the 13 developments. The results are detailed below. They make grim reading.
Argent Court, Barnet, Greater London
2009 McCarthy flat marketed at £199,950
2008 Same flat sold £266,950
Loss of at least 25%
June 2012 flat sold for £190,000
October 2007 purchased for £248,447
Loss 24 per cent.
Wider local housing market prices fell 0.44% in the period
Pinetree Court, Stevenage, Hertfordshire
2012 McCarthy flat currently marketed at £130,000
August 2006 same flat sold for £159,450
Loss 18%
11 Months ago most recently flat sold for £147,000
December 2006 sold for £200,950
Loss 27%
Wider local market rose 3% in the period
Northgate Court, Biggleswade, Bedfordshire
Recent McCarthy flat currently marketed for resale at £164,950
April 2012 Similar flat sold for £140,000
September 2009 sold for £169,850
Loss 18%
Wider local house prices rose by 5%
Eden Court, Milton Keynes, Bedfordshire
Recent McCarthy flat currently marketed for £140,000
Flat sold twice before:
October 2007 for £172,351
September 2010 for £149,000
Both owners appear losers
January 2012 another recent flat sold for £172,500
October 2007 sold for £221,604
Los 22%
Wider market fell by 9%
Salter Court, Colchester, Essex
Recent McCarthy flat currently resale at £119,950
October 2005 same flat sold £158,950
Loss 25% over seven years
June 2012 another flat sold for £113,000
August 2005 sold previously for £148,950
Loss 24%
Wider local market grew 7%
Portman Court, Uckfield, Sussex
Flat currently marketed resale at £170,000
April 2012 similar flat sold £180,000
Previously sold in August 2008 for £249,950
Loss £70,000 in four years (28 per cent).
Wider market for the region, rose by 3% same period
Amelia Court, Worthing, Sussex
Flat currently advertised for resale at £395,000
September 2010 same property achieved £375,000
April 2010 another flat sold previously £228,950
September 2010 sold £195,000
Loss £30,000, 15%
Wider property region dropped by 2% in period
Otters Court, Witney, Oxfordshire
A flat currently advertised resale at £149,950
September 2010 sold for £177,950
Likely loss of 16 per cent or more
McCarthy owner made profit. Hurrah!
June 2012 flat sold for £249,950
Previously sold for £222,733 in November 2008
Profit 12%
Wider market’s growth, 9% for the period.
Montes Court, Coventry, West Midlands
Flat currently on market for £154,950
May 2009 sold for £179,950
loss of £25,000 (14% minimum)
July 2012 another Flat sold for £179,950
March 2008 previously sold for £229,678
Loss 22%
Wider market fell 9% in the period.
Rowan Court, Thirsk, North Yorkshire
Flat currently on market for £119,950
July 2007 sold for £107,500.
Profit 11%
Late 2011 flat sold for £144,450
May 2007 sold for £158,613
Loss of 9%
Wider local market fell 13% in the period.
Timothy Hackworth Court, Stockton-On-Tees
Flat currently on the market for £145,000
July 2008. sold for £166,261
Loss12%
February 2009 sold for £158,716
Loss 8.5%
One neighbour did better
June 2012 a flat in the complex fetched £220,000
June 2009 sold for £174,950
Profit 26%
Wider market grew 2% in the period.
From these figures it can be seen that McCarthy & Stone flats have in general lost large amounts from the original sale.
Could the financial position of the freeholder have any bearing on leasehold values?
I ask this as it has just been announced that a substantial part of the Tchenguiz empire (through Fairhold) has defaulted on their loan agreements, triggering the cancellation of swap instruments.