Only 2 per cent of UK over-65s live in specialist retirement housing – against 12 per cent in USA and 17 per cent in Australia – and there is no reason for more to do so because of today’s report from the Law Commission.
It does not address the scandals of the retirement housing sector, which make it such a disastrous choice for many families.
You can see on the Land Registry the wealth erosion of retirement housing in the abysmal prices paid for resales here:
The Office of Fair Trading twice investigated retirement housing.
On exit fees payable on sale, the OFT said in September 2012 that they were “likely” to be an unfair contract term. (The Law Commission absolutely refuses to reference this.)
McCarthy and Stone dropped these exploitative lease terms in 2008 because the OFT was investigating.
Thanks to the Law Commission report, it can now reintroduce them so long as they are “transparent”.
Retirement housebuilders have been given the green light to load exit fees – and other monetising lease terms – rather than address the more robust and useful inquiries of the defunct OFT.
This means more fees payable to freehold owners, such as the Tchenguiz Family Trust in the British Virgin Islands (which unaccountably still owns the old McCarthy and Stone freehold portfolio).
The other OFT investigation ruled in December 2013 that the largest property management company in the country Peverel – now renamed FirstPort – systematically cheated pensioners with a bogus tendering process for electronic door systems.
More here: http://www.carlex.org.uk/peverel-cirrus-price-fixing-story-far/
These were the circumstances in which the Law Commission was tasked to consider exit fees.
Instead of trying to address these serious failings, it has lent its efforts to untested business models from housebuilders in the sector that load fees at the end of occupancy – ie at sale. It has been assured that these models work just fine in other jurisdictions.
Couple these fees with the revenue earning potential of opaque leasehold terms, and it is hard to see how the Law Commission has done consumers many favours.
It is mildly good that, for example, Barchester retirement housing, which takes a 10 per cent exit fee on sale and 50 per cent of any uplift in value, will have to make these conditions more transparent (because they are nowhere to be seen on its publicity material at present).
We should welcome officialdom’s efforts to address society’s unfairness, when it is genuine.
The Law Commission report on exit fees is tokenistic.
Pensioners and their families who feel they have been blatantly cheated in retirement housing have reason to feel let down.
Sir Peter Bottomley MP and Jim Fitzpatrick MP, the patrons of LKP / Carlex, concluded that the interim report was “a backward step”. So it remains.
The full report is here: