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Why Are Retirement Flats Not Selling?

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Why Are Retirement Flats Not Selling?
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There are many retirement homes across the UK.

However, there have been fewer willing buyers of them in recent years.

But what are retirement flats? And what is causing them to sell less frequently?

Read on for an answer to these questions and more.

Two elderly people on bench talking

What is a retirement flat?

retirement flat is typically a leasehold property in an age-exclusive development.

Buying a flat in a retirement village is a prevalent example in the UK. This is particularly attractive to people over 55.

In addition to the purchase price, buyers will typically have to pay ground rent to live there.

The cost of this can range anywhere between £50 and £300, or sometimes even higher.

There are several benefits to purchasing this type of property – outlined in the section below.

Retirement flats and leaseholds

Most retirement flats are sold on a leasehold basis, which means that residents have a tenancy granted for a long time.

This is typically either 99 years or 125 years. However, more recently built flats have been known to have a lease up to 999 years.

Leaseholds should increase the value of flats in the long run.

Pros of buying a retirement flat

Companionship

Loneliness is pervasive for people at a retirement age, especially for those who are widowed.

However, the opportunity to live in a ‘retirement village’ amongst people of the same age presents an attractive way of overcoming this.

People in retirement flats can make new friends and enjoy a far more sociable lifestyle.

Independence

Retirement flats also give residents a sense of independence, which they perhaps wouldn’t get if they lived in a care home.

This advantage is significant for people over 70, who are reluctant to enter a care home and instead want their own living quarters.

Safety and security

Finally, retirement flats often provide higher safety and security than regular flats.

This is because they are typically part of a more extensive complex with security and safety measures.

This is important to older residents, who are often vulnerable to crime.

Cons of buying a retirement flat

Service charges

In most cases, UK retirement flats are more expensive than their equivalents on the open market. This is due to the service charges residents must pay.

Service charges are monthly fees for maintenance and facilities available elsewhere in the complex.

Determining how much these costs will be from landlords before purchasing a retirement flat is essential.

Difficult to sell

Retirement flats are typically more challenging to sell than regular leasehold flats.

This is mainly because the target market for this type of property is much smaller (aged 55 and over) than a regular property on the open market.

This means that it may take a long time to sell your retirement flat.

Moreover, you will have to continue paying service charges while you wait for the property to be sold.

Exit fees

A third drawback of a retirement flat is the added cost of ‘exit fees’.

These are also known as deferred management fees or event fees. They are charged once your home is sold.

These fees aim to cover the costs associated with maintaining retirement villages and future repair costs.

Your lease will detail these fees. Before buying or selling a retirement flat, you should be clear on the terms.

Reasons why retirement flats don’t sell easily

Smaller market

The main reason retirement flats are not selling is that the target market is smaller than that of any other property on the open market.

For example, if a landlord can only sell to someone aged 55 or over, then this cancels out way over half of potential buyers for the property.

Furthermore, figures suggest that only 2% of UK over-65s live in retirement properties.

This means that the number of people searching for these types of properties is extremely small amongst an already reduced target market.

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