Advice from the Daily Mail last week on buying a leasehold retirement property: contact Carlex first!
Well, at least you will get the downside of this property transaction.
Any purchaser must understand – as an experienced property investor put it to me last week – McCarthy and Stone and Peverel are absolute experts at getting money out of old people. And you can include the other retirement providers such as Churchill (which is owned by the McCarthy family) and Pegasus as well.
Prices of new retirement flats have very little relation to their re-sale value, so expect a substantial reduction: 40-50 per cent off peak is not unusual.
The investor I met last week has accumulated a number of retirement flats and has never paid more that £42,000. The cheapest was £22,000, and he likes to buy flats at approximately their asking price when new in 1986.
The worst properties of the lot are the “retirement village” complexes often set around a nice country house run by stand-alone operators. Here it can be quite uncertain what buyers have actually bought.
One site in Hertfordshire had such an onerous lease that the property was virtually unsellable. It was the most extraordinary lease ever seen by LKP lawyers.
This can be a serious headache for heirs to the property, but it is a disaster for the residents who need to move for some reason – running out of money? – or need to go into further care.
The worst example I have come across was a £400,000 cottage, empty and unsold for six years, which meant the estate had paid £35,000 in service charges for an empty flat, and it was on the market at £250,000.
Carlex is trying to unravel a similar desperate retirement housing scandal in the Hertford constituency of Mark Prisk, the former housing minister.
Buying second hand or renting are obvious alternatives.
Another form of ownership is a lifetime interest based on an actuarial assessment run by HomeWise, based in Worthing. When you die or leave the property for further care, your interest comes to an end.
This strikes me as a model worth exploring, and Carlex would be very interested to hear of people’s experiences.
I like the actuarial model and the ironies it can throw up.
My father had a wonderful pension as a result of it, when he was asked the following questions:
Do you smoke? Yes
Do you drink excessively? Yes
Are you overweight? Oh, yes
Do you take any exercise? No. Did it all in Burma, 1942-45
The result: a stonking pension in confident expectation that he would quickly pop his clogs.
In fact, he lived to 85, outliving all of his clean-living friends.