Horrors hiding in small print for retirement flats

Small print for retirement flats could cost you tens of thousands of pounds

close up of elderly male hands on wooden table

Retirement properties offer security for people who want to stay in a home of their own, but want the added support they can get in a retirement development. The properties are adapted for older residents, there is a ready-made community nearby, and a trained first-aider on hand. In return for all this, residents pay a monthly management fee that they are well aware of. However, lurking in the small print are charges that could come as a horrible surprise when someone comes to sell a property.

These fees are known as 'event fees' and become payable in a variety of circumstances. They may be triggered if you need a carer, if you remortgage, if you want to sublet the property, and then when you sell up.

In some cases, the company will charge a percentage of the final sale price, which increases with each year you live in the property. It is designed to cover wear and tear, but longer-term residents in desirable developments could end up spending tens of thousands of pounds on these fees.

Some retirement development firms argue that fees are structured this way in order to protect the residents. The back-end costs, they say, help them keep the monthly charges lower. It means part of the cost is kept back until you have the equity in your home to cover it.


However, there's a very real risk that people are completely unaware of the additional fees - and aren't taking them into account when they buy the property.

In most cases, these fees are not brought up in the sales pitch: in some cases they are never mentioned at all, so it's up to buyers to find them in the small print. This may be a challenge for some, especially those who move into a property after the death of a spouse, when they have never handled the purchase of a property alone before.

In a report at the end of last year, Stephen Lewis, the Law Commissioner for commercial and common law, said: "There are good reasons why they might want to defer some of the associated costs, and pay an event fee when the property is sold. But too many people are being taken by surprise by hidden event fees. With the number of people over the age of 85 expected to double in the next 20 years, we need more specialist housing for older people. Developers, landlords and all those who benefit from event fees must do more to make them transparent before the public loses confidence in this valuable sector."

The Law Commission has just finished consulting on the issue - asking whether more needs to be done to make the fees transparent, whether estate agents should have to make the fees clear, and whether the courts should have more power to control unfair fees. It is expected to publish its findings shortly.

In the interim, anyone buying a retirement property should go into the process with their eyes open. You and your lawyer need to ask questions about all the fees involved - so you know exactly what you are paying for the property.

There will always be monthly fees, and usually fees on top. In many cases, the services available in return for the fees, and the security of having staff on site, makes the cost worthwhile, but you need to be certain you are in full possession of all the facts about all the fees before you make a decision for yourself.

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