A parent or grandparent is a specific type of investment. Deborah Stone highlights the things to look out for
What is retirement housing?
Most retirement housing is available to people over the age of 60 and is sold on a leasehold basis. This means there should be a long lease on the property with a small ground rent payable to the freeholder. Most retirement homes are managed by a management organisation, which is responsible for the day-to-day running of the housing, including
relevant services, setting and
collecting corresponding charges.
What should a service charge cover?
Upkeep, cleaning, repairs and maintenance of communal areas, such as corridors, lifts, lounge areas and external grounds. It will also include building insurance.
You or your older relative havecertain rights regarding service charges – including access to a summary from the managing agents of the income and expenditure for the previous accounting year –but you may have to request this in writing. Under the codes of good practice a tenant also has the right to be consulted on how the service charge has been calculated, prior to the accounting year.
What RESPONSIBILITIES DOES THE TENANT have?
In addition to the service charge, tenants are responsible for:
• Maintenance and repairs to the inside of the property
• Ground rent
• Council tax
• Contents insurance
• TV licence (for under 75s)
• Telephone and fuel bills
Some charges for water and fuel bills may be part of the service charge if they are for communal areas, e.g. for laundry, lighting and heating. Some retirement housing may give a concession on a TV licence.
How can you check if A management company IS any good?
It is critical to check who the management is, what experience they have at managing such properties and what their communication channels with residents are. Check whether they are members of a recognised trade body, such as the Association of Retirement Housing Managers (ARHM), which promotes and maintains standards of management in privately owned retirement housing. All management organisations registered with the association are bound by the ARHM Code of Practice. Also check if there is a residents’ association that works with the management organisation to ensure residents’ views and needs are considered and addressed accordingly.
IS A warden service IMPORTANT?
Many retirement housing schemes have a warden or manager. The duties of the manager vary between schemes.
Information about the manager’s duties, hours of service and details of any relief or emergency cover during the manager’s absence should be outlined in aleaseholder’s handbook.
The manager’s salary and related overheads can account for a substantial percentage of the service charge.
Properties without a warden will probably charge a lower service charge.
CAN I GET Financial help with retirement housing?
A funding system called Supporting People can assist with paying towards housing-related support services, such as warden services and an emergency alarm service. If your elderly relative is on a low income, they might be able to get help from their local authority, who will need to assess your relative’s financial situation. It is always worth enquiring about what’s available in your area before committing to a retirement property.
WHAT ARE MY rights as a resident of a retirement community?
There are two main codes of practice that exist to protect residents’ rights in retirement housing:
The National House Building Council (NHBC) Sheltered Housing Code of Practice applies to all retirement housing built after 1 April 1990.
When buying a new property check if a developer is registered with NHBC.
Buildings with NHBC’s Buildmark warranty will give extra protection.
The code instructs the developer to ensure that residents’ rights are fully protected by a legally binding management agreement between the developer or freeholder and the management organisation.
All purchasers must receive a purchaser’s information pack.
The ARHM’s Code of Practice
regulates managing agents including private companies and housing associations who manage private retirement housing. Its code covers issues such as good practice in providing services, including the scheme manager service and setting and collecting service charges.
It also states that a management organisation should consult residents on all significant issues, hold annual meetings, visit schemes at least quarterly and encourage the setting up of residents’ associations.
What should A Leaseholder’s Handbook include?
• The name and address of both the freeholder and the management, details of the relationship between them, and information on whether the management organisation is a party to the lease
• A summary of your older parent’s contractual rights and responsibilities as a leaseholder, including service charges, insurance, warden responsibilities, alarm systems, consultation, repairs and other rights that are specific to that scheme
• A full explanation of services and
facilities provided by the
• Details of all payments, fees or charges due
• Details of rights on resale, including details of any restrictions; for example, that you can only sell to someone over 55 or 60 years of age, and details of any deduction such as fees for administering re-sales, premiums to the landlords or
• Details of any transfer or exit fees, which the leaseholder is required to pay to their freeholder if they sell or rent their property, dispose of it in some other way or otherwise make changes to the occupants of the property
WHAT ARE Shared ownership schemes?
Some schemes are available for older people who cannot afford the full market price of a retirement property. These can involve buying part of the equity of the property and paying rent on the remainder, or buying the right to live in a retirement property for the rest of your elderly parent’s life. You should seek independent legal and financial advice if you are considering one of these schemes.