Retirement villages need to be more upfront about controversial fees that cost residents of luxury complexes thousands of pounds.
This was the conclusion of a two-year investigation into so-called ‘event fees’ by the Law Commission.
Owners of properties in specialist retirement villages get access to health clubs, bars, restaurants, hairdressers and sports facilities in addition to round-the-clock care if required.
However, properties within these villages – which thousands of older people are moving into every year – are almost exclusively sold on a leasehold basis. As a result, residents are subject to fees – for example when the property is sold or there is a change of occupancy.
The Commission’s research found that fees were sometimes hidden in leases, were charged unexpectedly or too late in the process for the resident to take action. If residents were aware of the fees they may not necessarily appreciate their financial consequences.
With the number of people moving into such properties only likely to increase, the Law Commission says it is important to protect vulnerable consumers from charges that are ‘unfair’ or imposed in ‘unfair circumstances’.
The commission did not, however, suggest fees should be scrapped, but recommended they are regulated with a new code of practice.
The proposed rules would limit when fees can be charged and the scale of those fees. They would also ensure that consumers are made aware of them early in the purchasing process – this would explain how fees are calculated, who receives the fee and what the consumer receives in return. Purchasers would also need to be told whether fees would be affected by changes to the value of the property.
‘Unscrupulous landlords are getting away with high hidden fees’
Law Commissioner Stephen Lewis says: “For many, event fees are a good way to enable the purchase of a quality retirement property now, by deferring payment of some of the running costs until they come to sell their home later. But, in the worst cases, a few unscrupulous landlords are getting away with very high hidden fees buried deep in the small print of a long and complicated lease.
“We’d urge the government to crack down on rogue landlords by regulating the sector and making sure that before consumers sign on the dotted line, they have already been told exactly what’s being provided for their money.”
Nick Sanderson, chief executive of retirement village developer, Audley, says: “Audley entirely agrees with the Law Commission’s recommendations around transparency, as there have been incidences in the sector where consumers have been hit with unforeseen charges. Audley was mystery shopped as part of this inquiry and the way in which its fees were explained were found to be entirely transparent with no cause for concern for customers.”