Retirement properties can be difficult to sell (Image: Getty)
Buying a retirement flat can offer security, independence and a ready-made community. But as part of the Daily Express’s Stop the Retirement Flat Trap campaign, we have spoken to families left in desperate situations after inheriting retirement flats they have struggled to sell for years. With no buyers forthcoming, many have been forced to continue paying service charges and other ongoing costs while the properties sit empty.
Around 10,000 retirement flats are estimated to be lying vacant across England and Wales. Meanwhile, residents still living in some developments have shared their concerns with the Express about rising service charges despite claiming little is being done to improve their buildings. The developers, who are in most cases the freeholders and therefore landlords, have only limited legal obligations beyond the terms set out in the lease, leaving some homeowners frustrated over what they receive in return for increasing costs.
Buying a retirement flat – and especially inheriting one – can come at unexpected financial and legal costs. Leasehold campaigners and property experts have repeatedly called for greater transparency and stronger consumer protections, urging prospective buyers and their families to fully understand the long-term costs before committing.
Ian Harris, President of NAEA Propertymark, the professional and regulatory body for estate agents, said it is important to look beyond the purchase price and understand the full financial commitment involved.
Here are the seven key checks he recommends every buyer and their family should make before purchasing a retirement flat.
Ian Harris, President of NAEA Propertymark (Image: LinkedIn)
1. Read the lease carefully
The lease sets out your rights and responsibilities as a homeowner. It explains what charges you’ll have to pay, any restrictions on the property and your obligations as a leaseholder. If anything is unclear, ask questions before committing.
2. Check how service charges have changed over time
Don’t just ask what the current service charge is – request previous years’ figures to see whether costs have risen steadily or increased significantly. Understanding the history of charges can help you budget for the future.
Harris said: “Rising service charges can influence resale values and buyer demand, particularly where costs are perceived as unpredictable or unaffordable. Service charge increases are not automatically unreasonable, particularly where they reflect genuine increases in the cost of managing and maintaining a development. However, leaseholders should be able to see clearly what they are paying for, how costs have been calculated and whether expenditure represents value for money. Transparency and effective communication between managing agents, freeholders and leaseholders are essential to maintaining confidence.”
3. Ask whether major works are planned
When it comes to service charges, buyers should also seek to understand what is included within the charge, and ask about any planned major works as these could result in additional costs. Find out whether any significant works are scheduled and whether residents may be expected to contribute towards them.
4. Know your rights
Harris explained: “Leaseholders do have protections where they believe service charges are unreasonable or have not been properly incurred. They can request information and supporting documentation relating to charges and, where appropriate, challenge costs through the First-tier Tribunal (Property Chamber).”
5. Find out if there’s a sinking fund
When you live in a leasehold property you may be required to pay into a sinking fund through set monthly charges. A sinking fund is a long-term savings account which ensures that there is capital set aside to cover one-off expenses in the future.
While a service charge covers the cost of any ongoing general maintenance to the property, the sinking fund ensures there is capital to cover major planned works down the line. A well-funded sinking fund can help spread the cost of expensive works over time and reduce the likelihood of unexpected bills. However, buyers should understand exactly how the fund is collected and how much they and those who inherit the flat will be expected to contribute over time.
6. Understand any resale restrictions
Retirement properties often have a smaller pool of potential buyers because they are designed for older residents. Before purchasing, ask how the resale process works, what are the age restrictions and whether there have been recent sales within the development.
Harris said: “Existing owners who are concerned about future costs, resale value or inheritance planning should consider the long-term affordability of their property and understand the terms of their lease. Retirement housing is primarily a lifestyle choice, and owners and their families should have realistic expectations about future demand, ongoing costs and the way the property may perform in the resale market.”
7. Get independent legal and financial advice
Before exchanging contracts, seek advice from an independent solicitor experienced in leasehold property and, where appropriate, a financial adviser. They can help explain the long-term costs, highlight any unusual lease terms and ensure you understand exactly what you’re agreeing to.
Harris concluded that “greater transparency around service charges, stronger accountability for those managing developments and clearer information for buyers would help consumers make more informed decisions.”
He added: “Well-run retirement developments with good facilities, effective management and clear communication can continue to provide attractive housing options for older people. The focus should be on ensuring homeowners understand the costs involved and have confidence that they are receiving fair value for the services provided.”