Retirement villages can combat isolation in old age and help keep money in bricks and mortar but there will be fees. Sharon Dale reports.
The number of retirement villages is growing with established providers expanding, new players entering the market and big investors, such as Legal and General and AXA, buying them in the hope of good long-term returns.
The trend will increase choice for buyers and should help combat one of the 21st century’s most insidious issues - social isolation. It’s such a serious problem that the government has just appointed Tracey Crouch as minister for loneliness to continue work started by Jo Cox.
There’s little doubt that retirement villages can ease isolation. While traditional over 55s flats have a communal lounge, the “care communities” take a “bells and whistles” approach. They boast bistros, libraries, craft rooms, gyms, gardens and organised activities, with an option to buy in extra services, such as cleaning and personal care.
This amenity-rich offering means that costs are considerably higher. They include service charges from £400 per month and exit/event fees, that can add up to between 10 and 30 per cent of the property’s value when you come to sell it. Most re-sales are done in-house, which attracts another charge of up to two per cent.
The Law Commission recently criticised some providers for hiding fees in complex leases, though Michael Voges, director of trade body Associated Retirement Community Operators, says ARCO members, which include half of all providers, are transparent about them.
“Being upfront about fees is part of ARCO’s consumer code and we would like to see legislation that forces the rest of the industry to implement that approach. We also explain to buyers that the fees are there for a reason. These properties are expensive to build and they would not be viable otherwise. It’s an ‘enjoy the facilities now and pay later’ approach, which is the norm in other countries.”
Mr Voges adds that most village owners are invested in their schemes for the long term - building and managing their own estates and, according to research by property advisors JLL, 80 per cent of ARCO members’ re-sales, showed that property price growth mirrored the area average.
Enterprise Retirement Living is converting The Red House on Palace Road, Ripon, into a retirement village. It includes 50 flats and cottages and a host of amenities
The Red House website is transparent about event fees, which range from six to ten per cent. There are also examples of what fee percentages equate to in pounds sterling. An owner who sells an apartment after three years for £382,454 will pay a 10 per cent event fee of £38,345 and a 1.8 per cent sales fee of £6,884, bringing the total to £45,129.
Sales director Hattie Bacon says: “The communal facilities have been expensive. Owners over many years will benefit from their use, which is why leases have been structured so that all occupiers, not just the initial purchasers, make a contribution to the freeholder. The alternative would be for the first purchasers to pay a very high initial price and that wouldn’t be fair or workable.”
Janet Ainsworth knew exactly what the cost would be when she moved to Mickle Hill retirement village in Pickering and believes it was worth every penny. She part-exchanged her home in the Lake District for a £252,000 two-bedroom apartment.
The village has a bistro, cinema, salon, gym, activity room, library, residents’ lounge and a shop. Prices start at £204,950 with a £380 monthly service charge, which include heat and hot water.
Mrs Ainsworth says: “I was becoming more isolated so I thought a retirement village would be great help and it has been wonderful. Care and help is on hand 24/7 and I’m never lonely.”
Her two daughters were concerned about the move as they wanted her to be closer to them but she says: “This way is better for them because they don’t have the worry of making sure I am all right. Everyone has an “ok’ button in their home and if you haven’t pressed it by 10am a member of staff comes to check on you.
“I know there will be a fee if I sell but I don’t care because there are so many benefits to living here. It’s lovely life, there is lots to do and it’s very easy to make friends.”
*Mwww.micklehill.co.uk; www.redhouseripon.co.uk; www.arcouk.org