Call to axe rip-off retirement home fees in small print

Bereaved families are being stung by thousands of pounds in hidden fees for selling a deceased relative’s retirement home because a Government crackdown has been delayed.

Many retirement property firms are taking between 1 per cent and 30 per cent of the sale proceeds. The Government had in March 2019 said it would force firms to come clean on the charges which can be buried in the small print.

The crackdown was recommended by the Law Commission after it found ‘major problems’ with these so-called event fees.

But Ministers have failed to act. Now charity Age UK is calling for the fees to be scrapped altogether. Chris Brooks, senior policy manager for Age UK said: ‘Exit fees are often hidden in the small print. It’s effectively a just a hidden charge for no real benefit or service.’

Later-life living in retirement villages had become increasingly popular in the UK before the pandemic, with over-55s attracted by the sense of community and 24-hour staff as well as facilities which often include pools, gyms, libraries, social activities and even cinemas. 

Owners of retirement properties typically pay a monthly service charge, an annual ground rent and, most controversially, event fees. These were previously called exit fees and apply as a percentage of the property’s value, payable when the flat is sold. 

The fees can increase the longer the owner has lived in the property. Some operators such as McCarthy & Stone charge 1 per cent in event fees. Others charge as much as 30 per cent, according to Which?.

Audley Villages, one of the UK’s biggest operators, for example, charges either a higher annual service charge and a 1 per cent event fee per year up to 15 per cent, or a lower service charge and double the event fee, up to 30 per cent. This means a house sold for £600,000 after 15 years could attract fees of £180,000. There is no suggestion Audley’s fees are hidden.

The industry says these deferred fees make the initial purchase more affordable. Michael Voges, of trade body The Associated Retirement Community Operators, said they ‘allow a new generation of operators to spread out the cost of higher service levels and more extensive facilities’.

He added: ‘We are calling for the Government to implement the Law Commission’s recommendations so consumers can make informed assessments.’

Nick Sanderson, Audley Group chief executive, said: ‘We are committed to providing both current and prospective owners full transparency on fees.’