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Retirement Villages

As we enter our later years of life, the idea of moving somewhere more comfortable to enjoy our retirement can become more enticing. Specialised ‘Retirement Villages’ have seen growing popularity since they were first introduced to the UK in the 1980s, and are an appealing option for people looking to downsize. These are large developments, usually in attractive rural settings, built with older people in mind who wish to continue living independently, whilst also making adjustments for their age. Retirement Villages will usually offer a variety of leisure facilities, such as swimming pools, gyms, restaurants and bars, will arrange for various social activities and excursions for the residents, and offer care and assisted living services for those that need them.

Whilst retirement villages may seem an attractive proposition on the face of things, they do bring with them several legal and financial implications that you would not find in a ‘standard’ property. It is very important to take these into consideration when planning your move.

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Purchasing a Property in a Retirement Village

All properties in a retirement village will be leasehold. This means that, whilst you own the property itself for the duration of the lease, you do not own the land associated with it. You will have a legal agreement with the owner of the land, called the ‘Freeholder’ outlining various rules and responsibilities you will be required to abide by once you have purchased the property.

Whilst the lease will have all sorts of various terms to keep in mind (for example, some retirement villages will allow pets, whilst others will not), the most important part will be the ground rent and service charges you will need to pay to the Freeholder, or to a management company who acts on their behalf. The ground rent is, as the name implies, an annual fee you will be required to pay to the freeholder as ‘rent’ for living on their land.

The larger of the two costs will be the service charges. These are fees, usually paid each month, to cover the general maintenance of the retirement village, such as gardening, window cleaning and the upkeep of the area. If you have owned a leasehold property before, such as a flat, you may already be familiar with these kinds of charges. With Retirement Villages offering so many amenities however, the payments will also need to cover a wide range of other costs, such as on-site staff, upkeep for communal buildings, equipment for leisure facilities, insurance etc. This makes them substantially more expensive, and you can expect overall service charges to be in the region of £1,000 a month.

Selling a Property in a Retirement Village

Given that they can only be marketed to the over 55s, and the level of costs that come with owning them, properties in retirement villages have quite a limited market and can be notoriously difficult to sell.

Whilst we often like to think of our homes as investments that will help our children and families financially when they inherit them in the future, retirement properties can potentially become a burden instead. The ground rent and monthly service charges are still payable even when the property is unoccupied and, as they typically take so long to sell, the inheritors of the property may be stuck paying these large sums of money for extended periods of time. These recurring costs make selling the property as quickly as possible a priority which, when combined with the limited market, means that when they eventually are sold it may potentially be for much less than the property’s original value. Roughly half of retirement properties are ultimately sold at a loss, according to research by the Elderly Accommodation Counsel* (*

When it comes to selling the property, you may also find that you are tied in to using the management company’s own in-house estate agents or legal teams to facilitate the sale, who will charge much higher fees than you would expect to pay at a high street estate agent or solicitor.

Finally, once the property is sold, the management company will then charge the seller what is called an ‘exit’ or ‘event’ fee. This fee is usually based on how long the resident has lived in the property, but again may be costly, and can be as much as 30% of the final agreed sale price.

Should I buy one?

Depending on your circumstances, a home in a Retirement Village can be a great choice. They offer a sense of community, social events, actives and leisure facilities that can help you enjoy your retirement to its fullest. These benefits do ultimately come at a cost however, as the homes are quite expensive to buy and maintain, whilst having little-to-no chance of ultimately offering a return on your investment once sold.

It is important that you fully understand the costs and implications of purchasing a property in a retirement village before you make your decision. If you are considering buying one and have any queries, please do not hesitate to contact a member of our award-winning residential property team, who would be more than happy to help.

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