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Recent coverage by ITV’s Tonight programme has put retirement housing under the spotlight, raising concerns around issues including resale values and increasing service charges. Those are important issues and ones which anyone considering a move into retirement living should understand before committing to a purchase.
But the programme also highlighted something equally important: not all retirement living is the same.
The term “retirement property” encompasses a range of different housing and operating models. This includes Integrated Retirement Communities (IRCs), which combine independent accommodation with communal facilities, on-site support and access to care. ARCO, the main body representing the IRC sector in the UK, was keen to draw this distinction following the programme and confirmed that none of the organisations which came under scrutiny were ARCO members.
Looking beyond the property itself
For anyone considering retirement living, the decision is rarely simply about buying a flat or a house. It is about choosing a home, a community and, importantly, a long-term arrangement with an operator.
That makes understanding the particular model extremely important.
Prospective residents and their families should understand not only the purchase price, but the financial arrangements that will apply throughout their occupation and when the property is eventually sold.
Depending upon the particular scheme and documentation, matters requiring careful consideration may include:
- the service charges and what they cover;
- how and when charges can change;
- responsibility for major expenditure;
- any fees becoming payable when the property is sold;
- restrictions or procedures affecting resale;
- what happens to ongoing charges if the resident dies or permanently leaves the property; and
- the practical and financial implications for executors or family members while a property is awaiting sale.
These points should not necessarily be regarded as reasons not to choose retirement living. Rather, they demonstrate why transparency and proper advice at the outset matter.
The Integrated Retirement Community model
ARCO has emphasised that its members operate a different model from the retirement housebuilders featured critically in the ITV programme. Michelmores is proud to be a member of the ARCO Affiliate network and to work closely with those operating in the Integrated Retirement Community sector. Through our work in this area, we see the importance of ensuring that residents and their families understand the legal and financial arrangements involved, both when they move into a community and when the property is eventually sold.
In particular, ARCO says that IRC operators retain a financial interest in the long-term success of their communities, including the resale of properties. Its position is that this creates greater alignment between the interests of the resident and operator. ARCO also highlights the role operators can have in assuming responsibility for major capital expenditure, as part of its proposals for future tenure models.
Consumer protection is another important part of that distinction.
The ARCO Consumer Code is approved by the Chartered Trading Standards Institute. Its underlying principles are transparency and fairness, including ensuring that prospective residents receive clear information about fees and service charges sufficiently early to make an informed decision. ARCO also carries out compliance reviews of its members against the Code.
This additional framework is significant, but it does not remove the need for a purchaser to understand the particular legal arrangements they are entering into.
What happens when circumstances change?
One point arising from the ITV coverage deserves particular attention: what happens when somebody can no longer live in their retirement property, or dies and their executors need to sell it?
It is easy for this part of the arrangement to feel quite remote when somebody is happily choosing their new home. In practice, though, understanding the exit arrangements can be just as important as understanding the purchase.
That is why it can be helpful for family members to be involved in the process, where the prospective resident wishes them to be.
A purchaser should understand from the outset what will happen on resale, what payments may continue while a property remains unsold and what fees may become payable when the property is eventually sold. That knowledge can also make matters considerably clearer for family members or executors who may ultimately have to deal with the property.
A question of informed choice
There is considerable appeal in the modern retirement living model. For many people it offers the opportunity to retain independence while becoming part of a community, with facilities, support and care available as their needs change.
The important lesson from the recent debate is therefore not that retirement living is inherently problematic, nor that every model produces the same experience.
It is that the detail matters.
Consumers need to understand which model they are considering, how it operates, the protections that apply and both the immediate and longer-term financial commitments involved.
The legal documentation for a retirement property can differ significantly from a conventional residential purchase. Taking specialist advice at an early stage gives prospective residents and their families the opportunity to ask the right questions and understand the arrangements before making what is often an important lifestyle as well as financial decision.
At Michelmores, our Retirement Living team advises purchasers and their families on the legal aspects of buying and selling within retirement communities, helping clients understand both the property they are purchasing and the wider arrangements that come with it.
