Elderly facing huge fees from retirement flat landlords

ELDERLY people living in retirement properties are being hit with hidden fees costing tens of thousands of pounds, Britain’s legal watchdog warns today.

Following a two-year investigation, the Law Commission demanded a crackdown on ‘rogue landlords’ and the rip-off charges imposed on vulnerable residents.

In some cases residents are being hit with a bill of up to 30 per cent of the property price when they eventually move out. This figure can also be paid if the resident dies and their family has to sell up.

The bill, which can be as high as £60,000 on a £200,000 property, represents an accumulation of what are known as event fees.

In many cases, residents are charged for ‘changes of circumstance’, such as when they move a spouse or carer in with them. Event fees – which are typically 1 to 2 per cent of the value of the property – can also apply if the resident has to move to a nursing home and sub-let the property.

Although it refused to name names, the Law Commission said a few ‘rogue landlords’ are hiding complicated formulas deep in the small print and say the fees have ‘ a real potential for abuse’. Its report focuses on properties – many of them flats – sold on a leasehold basis, typically for 99 years.

They offer shared gardens and lounges and the opportunity for companionship. They also offer the peace of mind that, should an emergency strike, a staff member trained in first aid is never far away.

There are 160,000 such properties in England and Wales. The leaseholder is regarded as the tenant of the firm which owns the property. Typically the lease requires the landlord to maintain common areas and shared facilities. In return the tenant pays a ground rent and a service charge.

However, most long leases also require fees from leaseholders on certain events, such as a sale, sub-letting or change of occupancy. These are levied by the majority of properties.

The Law Commission said they can be a practical way of making retirement flats affordable – because residents can defer some of the costs of their time at the property and the landlord takes a percentage of the sale value. But the watchdog said there is a ‘real potential for abuse’ and said it had heard from families left ‘ angry and frustrated’.

Law Commissioner Stephen Lewis urged the Government to tackle the problem and introduce tough regulation to ensure residents are told exactly what they are being provided with and are paying for before they sign on the dotted line.

He said: ‘In the worst cases, a few unscrupulous landlords are getting away with very high hidden fees buried deep in the small print.’

In its report, the Law Commission said charges should only be imposed when a property is sold, or in ‘restricted circumstances’ such as when the property is sub-let or when the resident has died. Landlords should be banned from charging for change of occupancy.

‘Deep in the small print’