Retirement properties offer a new way of living for many and can be a great way to kick off later life, surrounded by a community, support and without the shackles of a big family home.
However, there are a number of things to consider when buying a retirement property, as well as getting good legal and financial advice, so they know in advance what to expect further down the line.
Retirement properties often come with a number of excellent amenities – some of the top-class facilities in the UK have swimming pools, on-site salons and cafes, for example.
Because of these benefits, retirement properties do need to levy fees, so it’s important that as well as buying your new home, you can also pay the ongoing costs too.
Check your lease
Most retirement properties are sold on a leasehold basis – and ideally, this lease should be for 999 years which is offered with a new-build leasehold property. However, many retirement properties may be offered for sale with a 99-year lease, or less.
These leases reduce in length unless extended, which can be a potentially costly process and the shorter the lease, the less attractive a property can look when it comes to re-sell.
Don’t be caught out by ground rent
As you may have seen, ground rents have hit the headlines in recent years, after developers started to include clauses in leasehold contracts which meant the ground rent rocketed – sometimes doubling every ten years.
Thankfully, since this has been brought to light the government has committed to reduce ground rents on future leases to a peppercorn (zero financial value). However, this is unlikely to impact many existing retirement properties and it is important to check how much the ground rent is and if it is likely to increase in the coming years.
Check the service charges
In addition to ground rent, many retirement properties will come with a regular service charge. This is payable to the landlord or management company and will cover services such as keeping the communal areas clean and maintaining gardens and the exterior of the buildings.
Again, it is important to thoroughly investigate how much the service charges are and what they cover.
Research the management company
Many retirement properties are run by a management company and before investing it is certainly worth doing some research into the company and its reputation – some have had bad press over recent years.
It is also worth checking the company is part of a recognised trade body (such as The Association of Retirement Housing Managers which represents 55 member organisations who manage over 100,000 retirement properties in the UK and seeks to ‘raise the standards within the sector by promoting best practice and ethics amongst those managing retirement housing’).
Check the restrictions
Many retirement properties come with an age restriction for residents – usually the lower limit varies between 55 and 60 years old.
Whilst this suits many, and is often part of the attraction, it can prove restrictive if, in the future a child or grandchild might want to move in. Something to bear in mind. Similarly, many properties have restrictions around pets which are worth exploring.
Investigate exit fees
It is not uncommon for landlords to charge an exit fee when a retirement property is sold on and this is often a percentage of the sale price.
After a consumer code was launched by the Associated Retirement Community Operators in 2015, these costs should be fully explained and transparent, but it is always worth investigating these fees carefully as otherwise they could come as an unwelcome surprise.