Im­por­tant con­sid­er­a­tions when buy­ing a re­tire­ment home

Yorkshire Post - Property - - PROPERTY -

have ded­i­cated sites to source re­tire­ment apart­ments both new and sec­ond hand.

The le­gal ti­tles are nearly al­ways lease­hold and the term of the lease is usu­ally 125 years. Un­der the terms of the lease, the apart­ment owner will be li­able for an an­nual ground rent of circa £200 per an­num plus ser­vice charges which are typ­i­cally paid on a monthly ba­sis.

The reg­u­la­tions con­tained within the lease will re­strict and gov­ern the oc­cu­pa­tion of the apart­ment to en­sure the owner com­plies with the re­quire­ments of the land­lord de­vel­oper. One such re­stric­tion will re­quire the owner to be self-suf­fi­cient and if the owner be­comes in­ca­pable of look­ing af­ter them­selves they may have to va­cate and move into res­i­den­tial care.

Fur­ther­more, most leases con­tain a covenant not to sub-let the prop­erty which may be a dis­ad­van­tage to some buy­ers.

Re­tire­ment apart­ments are not care homes. How­ever, the ser­vices pro­vided usu­ally of­fer a med­i­cal and health sup­port ser­vice. Other ser­vices in­clude a res­i­dents’ lounge, vis­i­tor room and overnight fa­cil­i­ties as well as recre­ation and shop­ping fa­cil­i­ties.

All such ser­vices have to be paid for out of the ser­vice charges col­lected by the free­holder land­lord from the lease­holder. In essence, the more ser­vices avail­able, which is of course to the ben­e­fit of the prop­erty owner, the higher the ser­vice charges. The level of the ser­vice charges will af­fect both the value and saleabil­ity of the apart­ment.

Ac­cord­ingly, you need to know ex­actly how much the ser­vice charges are, or, in the case of a new prop­erty, ex­pected to be so you and your mother are able fi­nan­cially to af­ford the monthly charges for many years to come.

Buy­ing any prop­erty is a long term fi­nan­cial in­vest­ment. If your mother be­comes un­able to pay the ser­vice charges then the lease may be for­feited and she will have to sell the apart­ment.

The sale prices for new apart­ments are usu­ally at a pre­mium. Ac­cord­ingly, buy­ing a sec­ond hand apart­ment may make more fi­nan­cial sense.

How­ever, the lease usu­ally con­tains a covenant that upon each sale two “trans­fer fees” of usu­ally one per cent of the sale price are payable; one fee payable by the seller and one payable by the buyer.

It is my view there is more sup­ply of re­tire­ment prop­er­ties than de­mand and thus the lo­ca­tion can be the key fac­tor when buy­ing. If there are shops, a doc­tor’s surgery, chemist and bus stops nearby the de­vel­op­ment then this will ap­peal to a wider buyer au­di­ence than a de­vel­op­ment in a more re­mote lo­ca­tion.

Be­fore mak­ing any of­fer I would re­quest that a copy of the lease is sent to your con­veyancer and they re­port to you upon the salient covenants af­fect­ing oc­cu­pa­tion, costs on sale and ser­vice charge his­tory.

John Rob­son is Res­i­den­tial Con­veyanc­ing Man­ager at Ford & War­ren Solic­i­tors, Leeds.

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