For almost a year, specialist retirement builders have been crippled by fears that the Government would prevent it from charging ground rents, which has been critical to help it fund communal spaces at their developments, from which all residents benefit.
Last week, the Government announced that the practice of charging ground rent to leaseholders would be capped at £10 per annum, with however, the exemption of retirement builders.
Ground rents are payments levied on leaseholders by freehold property owners which, in the past, have undoubtedly been abused by some landlords. They’re common in blocks of flats but often seem an unjustifiable expense.
That’s not generally the case with retirement homes. There, to fund the extra land cost and maintenance of shared dining areas, living rooms and so on, ground rents are sensible. The developer can sell the future ground rent income to specialist financial buyers, bringing in cash up front which allows it to compete against traditional housebuilders when it comes to bidding for land.
But it’s not just retirement developers who should be pleased; we should all welcome the Government’s good sense. We’re all living longer which not only means greater numbers of senior citizens but also demand for properties suited to older life. That also means communal living in supported retirement developments will become increasingly needed.
The ground rent threat has, in the last year, meant that developers have been scaling back on building new properties. This was completely understandable but also very frustrating, to them and all retirees, when there’s already a drastic shortage of retirement properties. With more older people than ever before unhappily rattling around in large family homes, providing more manageable homes will not only benefit them but also the rest of the housing sector.