Sadly, none of us are getting any younger. Eventually, that means we’ll need to do some thinking about where we’ll live when we retire. But if you’re thinking about buying a retirement property in a dedicated retirement village, here are some things to think about before you sign on the dotted line.
Is a property in a retirement village the same as sheltered housing?
Not quite. Sheltered housing is a type of retirement property for people who are generally independent but may need a little help now and again.
A retirement property in a dedicated retirement village is typically designed for completely independent living. This type of property is very often aimed at cash buyers who don’t need a mortgage.
Retirement villages typically offer a lifestyle choice and a number provide luxury living with a whole host of fancy amenities. Facilities can include access to a communal swimming pool, tennis courts, onsite yoga or even a golf course. But at the top end of the market, amenities also include restaurants, hair and beauty salons and libraries.
So what are the downsides of a retirement property?
As with most things, a retirement property isn’t for everyone, especially those within retirement villages.
For instance, all your neighbours will be of retirement age. And while that might mean you all have something in common, it’s a lot less diverse than living in a regular neighbourhood.
Not only that, many retirement villages are specially developed with hundreds of properties on site, which means they’re often out of town. So, if you like variety and going out and about, it can feel limiting unless you’re happy to drive everywhere or have good transport links.
Plus, there are some real financial points to consider, which (depending on your attitude) could be serious downsides. Let’s take a closer look.
You can expect luxury living to come with a monthly or annual service charge that goes towards the upkeep of communal grounds and facilities.
The cost varies widely, and a recent report from Which? revealed that for some retirement properties, charges could be as high as £840 a month.
Most retirement villages sell property on a leasehold basis. As such, you’ll need to factor in ground rent. As with maintenance fees, this can vary significantly and can increase at short notice.
It’s also worth noting that as properties are leasehold, there’s always a chance that you’ll need to extend the lease. With that in mind, check how many years are left and what the potential costs of renewal might be.
An event fee is essentially a cost you’ll need to pay for specified events, such as sub-letting, adding someone else to the lease or selling the property.
These fees have caused some controversy in the past and many residents and their families felt management firms weren’t transparent with the costs. These grievances were so financially damaging that the Law Commission got involved and recommended that the charges be regulated.
That recommendation hasn’t come into force yet, so event fees are at the discretion of management firms. So, if you can’t see these set out in your purchase agreement, it’s a good idea to ask for clarification.
Another bit of the small print you’ll need to make yourself aware of is what happens when you pass away. Some families who have lost loved ones have faced even more trauma with the resale of the deceased’s retirement property.
Look out for clauses about who can market the sale. Some contracts won’t allow you to use an estate agent of your choice and firms may want to market the property themselves, which can limit the audience.
Additionally, your estate might need to continue paying ground rent and maintenance fees until the retirement property is sold.
Is a retirement property worth it?
Ultimately, it depends on what you want out of retirement. Retirement villages offer all sorts of benefits if you’re after a particular lifestyle within a closed environment.
If you are considering a retirement village property, it’s important to understand all the sale terms and conditions and discuss any concerns upfront.
Other points to consider include your changing needs, for example, if you end up needing more assistance. Some retirement villages cater for this for an additional cost. Otherwise, you may need to move, which would mean dealing with event fees and onward sale issues.