Event fees are a common feature of many conveyancing transactions, particularly in the context of retirement living villages. Understanding when these fees arise, how they are calculated and their long‑term implications is an important part of making an informed property decision.
An event fee is a fee that becomes payable when a specified event occurs in relation to a property. In retirement living schemes, this is most commonly triggered on the sale of the property, although other events may apply depending on the terms of the relevant documentation.
Event fees may also be referred to as transfer fees, exit fees, assignment fees, sale fees, resale fees, purchase fees, or contingency fees. While the terminology differs, the underlying obligation is similar.
Most retirement living villages charge an event fee when a property is sold. These schemes are typically governed by the Lease, which sets out when the event fee is payable and how it is calculated.
Because these provisions are often embedded in lengthy and complex legal documents, careful review and explanation form a key part of the conveyancing process.
With the continued growth of the retirement living sector and changes in the wider property market, providers are increasingly offering an alternative structure.
Rather than charging an event fee on sale, some providers now offer an event fee payable on purchase, sometimes referred to as an initial services fee.
Paying this fee at the outset can remove the requirement to pay an event fee when the property is sold in the future. This approach can offer a greater degree of certainty, as traditional event fees payable on sale are often influenced by market conditions and any increase in the property’s value over time.
Traditionally, event fees payable on sale are calculated as a percentage of the property value and are often linked to the length of ownership.
Most leases provide for:
This means that the longer a property is owned, the higher the event fee may be, up to a specified maximum.
Where an event fee is payable on purchase, it is charged at a fixed percentage of the purchase price and is paid by the incoming owner when the property is acquired.
This percentage is usually set towards the higher end of the percentages that would otherwise apply under a traditional, time-based event-fee structure. While this removes the obligation to pay an event fee on sale, it does require careful consideration at the outset.
Providers typically explain that event fees are used to:
Understanding how these fees are intended to operate in practice is an important part of assessing overall value.
Event fees can represent a significant financial commitment. They commonly start at around 1% of the property value and, in some cases, can rise to 24% or more.
Before proceeding, it is important to consider how an event fee, whether payable on purchase or on sale, may affect:
We frequently find that event fees can come as an unexpected cost when Executors sell a property in the future. We therefore recommend that clients ensure their Executors are aware that an event fee will be payable upon sale.
At Michelmores, we carefully review the legal documentation relating to retirement living properties and:
If you have any questions about event fees or retirement living arrangements, please contact Louise Peters, Daisy Palmer‑Brown and Maisie Jagger, who will be happy to assist.
