Retirement Property Conveyancing

Retirement property conveyancing

There are many benefits to living in a retirement community, but buying a retirement property is a step that should be taken with your eyes wide open. However, our team of retirement property conveyancing specialists will ensure you have all the information you need to make an informed choice. And if you decide to go ahead, we will guide you carefully through the retirement property conveyancing process.

“Thank you so much for your amazing guidance throughout.” K.S.

Moving to a retirement property – weighing the pros and cons

It is easy to see why moving to a retirement community is appealing, and more are continually appearing. However, it is essential to weigh the benefits of living in such an environment alongside the direct and indirect financial costs associated with it.

Retirement communities provide services and facilities over and above what you find in a standard leasehold development. While the benefits vary, they typically include:

• a range of housing options to suit your needs, circumstances, and budget.
• ready access to a range of care levels to satisfy your current and future needs.
• a laundry service, guest rooms and well-maintained communal spaces.
• great social opportunities and facilities.
• personal alarm systems and a safe, secure environment.
• worry-free property maintenance.
• the ability to live independently for longer.

Buying retirement housing

Buying retirement housing is a major life decision. An important factor is inheritance. Our home is an asset that most of us hope to leave to our family. However, leaving them a retirement property inevitably means their inheritance is depreciated and, as you will see below, possibly by a significant amount.

We recommend having an open conversation with your loved ones about your intended move. Often, they are the ones who will ultimately be responsible for selling the property. Therefore, they should be aware of the very specific terms and conditions that apply. Our experts can offer guidance here.

“Your knowledge proved invaluable to us and we thank you for your time, patience and understanding.” P.C.

Retirement property ground rent

On 30 June 2022, a change in the law abolished ground rent for new residential leasehold properties. However, the ban does not yet extend to new retirement properties; when it does, it is unlikely to be retrospective. In other words, ground rent will continue to be payable on existing properties.

Retirement property service charges

Service charges, usually paid monthly, are higher for retirement properties than for standard leasehold homes. This reflects the additional staff and equipment costs, as well as the maintenance of communal areas, insurance, and other expenses. Additionally, please note that if your family resells the property after your passing, the service charge remains payable until the property is sold. This is an important consideration, as retirement properties can sometimes take longer to sell.

Buying retirement housing: other issues to reflect on

Among the other issues to reflect on are:

• Does the development offer the extra levels of care you might need in the future? Smaller developments, in particular, may have a more limited range of care options.
• Re-sale or exit fees may be payable to the developer when you or your family sell the property. If an exit fee is payable, it might be relatively small, but in some cases, the fees can be substantial. For instance, we have seen cases where the exit fee is as high as 30% of the re-sale value! As a general guideline, higher exit fees are more common in longer-established developments. While a 30% exit fee is not typical, we advise always checking carefully.
• Other re-sale conditions. A common example of a re-sale condition is restricting you to using a specific agent to market the property. Such agents are usually specialised in selling this type of property.
• Always check how many years remain on the lease. This is especially crucial when purchasing a property in an established development.
• Other lease terms. Your lease will contain numerous terms and conditions governing your use of the facilities, restrictions on occupation, and payment of the service charge.

Selling a retirement property

Selling a retirement property is significantly different from selling a standard leasehold flat or house, as the target market is smaller and a host of additional conditions must be complied with. Those conditions vary between developments.

“We really appreciated the clarity you brought to the process. Thank you.” A.H.

Retirement property conveyancing

Our experienced team of retirement property conveyancing specialists will provide you with clear information on everything you need to know and understand about buying a retirement property and the applicable terms and conditions, including:

• the service charges payable on completion;
• re-sale/exit fees when you come to sell the property; and
• whether the property must be offered back to the landlord before selling on the open market.

Can a young person buy a retirement property?

In principle, if you are over 18 and can secure funding, you can buy a retirement property. However, you will very likely discover that the freeholder has specific conditions that restrict the age at which somebody can buy and/or live in the property. Most often, this is somewhere between the ages of 50 and 60.

Can I buy a retirement property to rent out?

In principle, you can buy a retirement property to rent out. However, there are some very significant considerations:

• Are you eligible to buy a retirement property? Typically, developments restrict the age at which you qualify to buy their properties. Additionally, obtaining a mortgage for a retirement property can be difficult. If you already own and have a mortgage on a retirement property, you will need to check the mortgage conditions carefully to ensure that renting does not breach those terms.
• Is the retirement property leasehold? Almost all retirement properties are leasehold, and the terms of the lease will likely require you to obtain the freeholder’s permission to rent it out, for which they will usually charge a fee. Even if permission is granted, you are still responsible for paying the ground rent and service charges.
• What is your market? Your market will be quite niche, and the necessity of continuing to pay ground rent and service charges means that the rent you need to charge is very substantial.

See also: Can a pensioner get a mortgage?

Age UK

Charity Age UK has produced an excellent and comprehensive guide to buying retirement housing.