The pros and cons of buying in a retirement village
Fast approaching retirement age and wondering what your options are? The idea of a traditional nursing home sends shivers down our spines but todays retirement options offer more.
October 9, 2018
The traditional idea of retirement is changing with many people envisaging continuing to work, whether full or part time, largely because financially they need to or because they want to for wider reasons. Likewise the traditional idea of a retirement home is changing too. Today, there is a much broader range of options for people at and approaching retirement age. Here we look at retirement properties and villages and the pros and cons.
What exactly is a retirement village?
A retirement village is a housing development built specifically for older buyers, featuring a range of different property types, including houses, flats and bungalows. They often come with communal areas and onsite amenities such as swimming pools, restaurants and libraries. The main developers are McCarthy Stone, Audley Retirement Villages, Richmond Villages and Retirement Villages.
“Retirement properties have been around for ages,” explains property expert Ed Mead. “It’s just the demands, expectations and demographics are now so much bigger and higher that it makes complete sense for developers to cater for them.”
Buying a retirement property differs from buying a property on the open market as they are usually only on offer to the over 50s, often come with communal areas such as a dining room and leisure facilities, are most often leasehold properties (See more on leasehold properties here) and there is often an onsite manager providing extra support.
Most retirement villages are designed for independent living allowing older people to enjoy their retirement surrounded by great facilities and residents of a similar age. Buyers tend to feel safer living in such a complex than they would living alone and usually most maintenance and repairs are dealt with by the developer (at a cost – but more on this later).
What’s more, most retirement villages offer care and support for those who need extra help, with options including onsite care services or assisted living apartments, allowing you to maintain your independence whilst still having access to the care you need. Choose the right retirement village and you should be able to extend your independence by gradually increasing the level of assisted living help and medical care without having to move.
What to consider before you buy into a retirement village
The purchase price
One of the biggest downsides is cost. These properties are often sold at a premium because of the ‘luxury lifestyle’ they offer, so will cost you more than buying a standard property of the same size.
Service charges and ground rent
This will cover things like the upkeep of and utility bills for communal areas, the services of a house manager or caretaker, cleaning costs, building maintenance and repairs. These charges can be anything from a couple of hundred pounds per month to around £1,000 depending on the development. One of the biggest complaints regarding leasehold properties is that service charges are often opaque as well so they are hard to budget for. Research carefully how much other residents have paid before you
Retirement properties are usually sold as leaseholds. According to Age UK most leasehold retirement properties now come with 999 year leases, which removes some of the concerns over having to undertake costly lease extensions. However, you will have to pay ground rent so you’ll need to work this into your costs.
Selling on retirement village property can prove difficult. According to research by the Elderly Accommodation Counsel around half of new build retirement homes sold during a 10-year period were later resold at a loss. The research, which looked at thousands of Land Registry records for resale details of homes built between 1998 and 2012, found falls in value could be more than 50% while many properties built after 2002 had underperformed the general property market. And we’ve read some horror stories of buyers seeing the value of their retirement home selling for tens of thousands or more. So before buying make sure you check the resale value of similar properties in your location and of other properties by your chosen developer.
Failure to accommodate your specific health needs
None of us know what the future holds. But you should consider what will happen if your health needs change and you need a carer. While some facilities offer this, others don’t and you’ll need to consider how you’ll cope with this and whether your facility – and your finances – will be able to accommodate you.
If you move into full-time care and sell up you’ll have to pay an exit fee to the developer. These fees, also known as event fees, can be as much as 30% of the value of the property and are even – rather unbelievably – charged to the family when a resident passes away.
Not everyone’s cup of tea
While most people couldn’t argue with luxury facilities and having everything they need a stone’s throw away, retirement villages aren’t for everyone. For some, the space offered in some of these new developments is too tight and the idea of living with one sector of society is an odd concept.
But for others, retirements villages are the right answer. As long as you understand the costs, can find the perfect property, perhaps near relatives or in an area you love, it can work for the whole family – not least because you’ll be able to live around people of a similar age and benefit from ‘community’ living.
To give you an idea of what’s on offer in the retirement market we take a look at two of the biggest names in the sector – McCarthy & Stone and Audley Retirement Villages – and what they’ve got on offer.
Retirement properties in the Capital
McCarthy & Stone De le mare house, Beckenham
This gated development in Beckenham features 16 two and three-bedroom apartments, price from £552,950. The weekly service charge (including ground rent) for a two-bedroom apartment is £64.55 per week, while for a three-bed it’s £85.88. It’s worth noting Council Tax, apartment electricity, TV licence and telephone/broadband are not included in this.
Our verdict: Leafy London suburb location with lots of local amenities on your doorstep, but there doesn’t appear to be any nice extras or communal areas which has us scratching our heads. Why not have a look at what’s available on Rightmove for that price in Beckenham. We think you’ll be pleasantly surprised, and can spend the £4,000 you save on service charges on a gardener and cleaner to help with upkeep.
Audley Retirement Villages, Nightingale Place, Clapham
Overlooking Clapham Common, Nightingale Place features 94 one to three bedroom apartments as well as a pool, cinema, restaurant and health club, priced from £665,000 to £1.6m. The management fee each month is around £1,000 (varying between apartments). The website also states you’ll pay a ‘deferred management fee’ of 1.5% (!)of the greater of the achieved market price or agreed valuation of the property per year of occupation before receiving the proceeds”.
Our verdict: If you want to retire in luxury and would feel comfortable living in a swish hotel in a great London location then we can’t imagine you can do much better than this. Add-on care facilities at various levels are also available. But my goodness, the cost!
Retirement properties outside the Capital
McCarthy & Stone Glenhills Court, Glen Parva
Communally, there’ a restaurant, a homeowners lounge and a sun terrace. The development also offers care provisions. Service charges range from £136.52 per week for a one bed and £181.74 per week for a two-bed apartment although the first year’s service charge is apparently paid for you as part of a special offer. With all the one-beds already sold, a two-bedroom apartment would set you back £224,950.
Our verdict: This felt like more of a standard retirement village, comfortable with communal areas, and a nice location by the canal. We liked the range of care provisions on offer too.
Audley Retirement Villages St Elphin’s Park, Matlock
St Elphin’s Park, in the Derbyshire Dales, features 127 properties, starting from £225,000 for one beds along with communal features including a restaurant, bistro bar, health centre and fitness suite. The leasehold term is listed as ‘up to 125 years’ which is not very long so beware, and you’ll pay £500 per year in ground rent as well as a service charge of around £730.37 although this apparently includes a credit of £63.90 for the restaurant. Remember that service charges can change (ie increase) year on year. Again a deferred management fee will apply.
Our verdict: Very pretty properties and nice facilities – including an indoor pool – but there’s that pricey service charge and deferred management fee again which is a little hard to swallow.