The hidden cost of the lease on your retirement home

Year Published: 2010

Many Retirement Home Landlords charge exorbitant exit fees on the sale of a retirement flat. The practice has been under investigation by the Office of Fair Trading and it is hoped that many of the firms who they have approached will agree to sign undertakings which would mean they are legally bound to stop enforcing or relying on exit fees from the date of signing.

In September 2008 McCarthy & Stone plc (many of whose assets and liabilities have now been transferred to McCarthy & Stone Retirement Lifestyles Limited) agreed to voluntarily sign the undertaking. Not only did they agree to not put the fees in any new contracts but also to not enforce any existing ones.

We truly hope the other 26 Retirement Home firms which the OFT have approached will follow suit and agree to sign the undertaking. In some instances, such as a case where we have recently been involved, the exit fees amounted to just over £3,000 on a property which was sold for £125,000.00.

Whilst for many this fee may not seem excessive, as a percentage of the sale price it has to be put into context. Most of these properties are sold because the person has gone into a care home and they need the money to pay fees. The fee is almost double the estate agent’s fee in this case and is 6 and half times the solicitor’s fee!

Part of the information in this article is taken from the Office of Fair Trading website and full details can be found at:

http://www.oft.gov.uk/oft_at_work/markets/markets/retirement-homes

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