The government urged the elimination of fine-care costs for retirement homes to be abolished, as the crackdown is delayed
- There are hidden costs for the sale of the retirement home of a deceased family member
- Many real estate companies absorb between 1% and 30% of the proceeds
- Charity Age UK calls for the fees to be dropped altogether
Survivors are put in thousands of pounds in hidden costs for the sale of the retirement home of a deceased family member, because a crackdown by the government has been postponed.
Many retirement companies absorb between 1 percent and 30 percent of the sales proceeds. The government had said in March 2019 that it would compel companies to clear the costs buried in the fine print.
The crackdown was recommended by the Law Commission after it identified “major problems” with these so-called event rates.
Many retirement companies absorb between 1% and 30% of the sales proceeds
However, the ministers have taken no action. Now the charity calls on Age UK to cut the fees entirely. Chris Brooks, senior policy manager at Age UK said, “Exit costs are often hidden in the fine print. It’s really just a hidden fee with no real benefit or service. ‘
Later life in retirement homes had become increasingly popular in the UK before the pandemic, the over-55s were attracted by the sense of community and 24-hour staff, as well as facilities that often include swimming pools, gyms, libraries, social activities and even movie theaters.
Retired property owners typically pay a monthly service fee, an annual leasehold fee and, most controversially, the cost of events. These were previously referred to as exit fees and apply as a percentage of the value of the property payable on sale of the flat.
The costs may increase the longer the owner has lived in the property. Some operators, such as McCarthy & Stone, charge 1 percent in event fees. Others charge as much as 30 percent, according to which?
Audley Villages, one of the largest operators in the UK, for example, either charges a higher annual service fee and an event fee of 1 percent per year to 15 percent, or a lower service fee and doubles the event fee, to 30 per cent.
This means that a home sold for £ 600,000 after 15 years could make £ 180,000. There is no evidence that Audley’s fees are hidden.
The industry says these deferred fees make the first purchase more affordable. Michael Voges, of the trade association The Associated Retirement Community Operators, said they “allow a new generation of operators to spread the cost of higher service levels and more extensive facilities.”
He added, “We call on the government to implement the Law Commission recommendations so that consumers can make informed assessments.”
Nick Sanderson, CEO of Audley Group, said, “We are committed to providing both current and prospective owners with full transparency on fees.”
TOP SIPPS FOR DIY PENSION INVESTORS