Hidden costs behind the retirement home rip-off

Retirees are being trapped by leasehold deals involving exorbitant fees, finds Alexa Phillips

Pensioners living in retirement homes are being hit with “ridiculous” charges, with some paying as much as £90 to change a light bulb, a Telegraph Money investigation has found.

Those who downsize into expensive retirement homes in later life are being stung by costly fees that are causing their property prices to plummet.

MPs and campaigners warn that vulnerable retirees are being trapped in leasehold agreements that leave them at the mercy of unscrupulous management companies.

The Government says the service fees uncovered by our investigation were “completely unacceptable”.

Documents seen by Telegraph Money reveal how retirees at a development in Leeds were allegedly overcharged without their knowledge. The pensioners are taking legal action to claim back more than £71,000 from the former management company and another £26,770 to replace a conservatory that was so badly neglected it was condemned as unsafe.

Erica Collier, 64, from Leeds, said she and residents took action to boot out their management company, Accent Housing, amid concerns they were not getting good value for their money.

Residents say they had been receiving a vague breakdown of their charges that made it difficult for them to understand what they were paying for.

Their new management company, Smiths, took over the contract this year and reduced their annual service charge from £3,320 to £2,886. Across the entire development, the costs were revised down from £99,610 to £86,584.

When Smiths took over, it received a more detailed description of the bills from Accent Housing and started poring over the documents. Ms Collier said residents were appalled by the “ridiculous” charges, adding: “The prices they were charging us were just horrendous.”

Charges included £ 90 to change a light bulb in a cupboard, £546 to repair a washing machine, £ 174 for a “tree inspection” and £ 7,800 a year for a “management licence fee”.

Ms Collier said: “Our service charge was rising exponentially, and the building was in a very poor state of repair.”

She said residents were “horrified” because of how much they were paying for the upkeep of the conservatory. They are trying to get back about £71,000 of charges by taking legal action.

Ms Collier, who bought her home in 2017, said homeowners created a residents’ association and voted to form a “right to manage” company to allow them to get rid of Accent Housing and appoint another firm.

When the new company took over this year, the interior was redecorated, the laundry room was upgraded and CCTV was installed to cut vandalism.

Clive Betts, a Labour MP and chairman of the housing select committee, said the current leasehold system contains “the potential for abuse” and the Government was taking “far too long” to address issues with service charges.

Peter Bottomley, the Tory chairman of the cross- party group on leasehold reform, said: “Everybody involved in handling somebody else’s cash should have a legal duty to give best value.

“We’ve got that now for financial advisers. It should apply to landlords, to managing agents and to the others providing necessary services to people in retirement properties.”

Michael Gove, the Housing Secretary, said he wanted to abolish the leasehold system in January, but later watered down his comments, saying it would be altered in a bill to be outlined this autumn.

Sebastian O’Kelly, of consumer group the Leasehold Knowledge Partnership, said: “It’s an absolute certainty that older people are being taken advantage of. There’s no oversight of this.”

Some residents have seen service charges rise beyond their means, leaving their families with huge debts.

Thomas Renshaw, 94, from Bingley in West Yorkshire, said he has had “sleepless nights” over unpredictable increases to his service charges, which will rise by 20pc this year, to £10,619.

He said: “Quite a few of the older people that live here cry on my shoulder.”

Mr Renshaw wishes he had read the contract thoroughly before signing it. He moved in when his wife had worsening dementia, which was an anxious time. Although he appreciates the 24/7 care and amenities available, he regrets moving to the property, which has been managed by FirstPort. He is also watching his equity dwindle. He paid £160,000 for a two-bedroom flat, which is now being advertised for £140,000.

Mr Renshaw said: “It would have been better for me to stay where I lived.”

A FirstPort spokesman said: “Whilst we do everything we can to control costs and get the best value for money for homeowners, in order to provide the additional assistance required by residents at the assisted-living developments, some cost increase has been beyond our control, for example with salaries, utilities and catering.”

An Accent Housing spokesman said: “We apologise for historic issues with our repairs and maintenance services. We have recently commenced a process of transformation involving a number of our services and are seeing many positive improvements, which are reflected in current customer feedback.”

A Department for Levelling Up, Housing and Communities spokesman said: “Service charges must be reasonable and we expect them to be communicated effectively to leaseholders.

“However, charges like these [referring to Ms Collier’s case] are completely unacceptable.”

Has had fellow residents crying on his shoulder over service charge rises and seen equity in his property dwindle ‘It would have been better for me to stay where I lived’