There is a hugely diverse range of properties throughout the UK – and one of these are retirement flats.
Retirement flats are not commonly discussed amongst people below a certain age, but they are still numerous throughout the UK. Nevertheless, there has been a downward trend in willing buyers for these types of properties 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.
What is a retirement flat?
A ‘retirement flat’ is typically a leasehold property in an age-exclusive development. Buying a flat in a ‘retirement village’ is a very common example of this in the UK.
The majority of retirement flats are sold on a leasehold basis. This means that residents have a tenancy granted for a long period of 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.
As well as paying the purchase price, buyers will also typically have to pay ground rent in order to live there. The cost of this can range anywhere between £50 to £300, or sometimes even higher.
Retirement flats are particularly attractive to people over the age of 55 – and the landlords often only sell to people in this age bracket. There are several benefits to purchasing this type of property – outlined in the section below.
Pros of buying a retirement flat
There are a number of significant benefits to buying a retirement flat – and when landlords attempt to sell these properties, they tend to focus on these advantages. Some key pros of purchasing a retirement flat includes:
- Companionship
- Independence
- Safety and security
Loneliness is particularly common for people at a retirement age. However, the opportunity to live in a ‘retirement village’ amongst people of the same age presents an attractive way of overcoming this. Instead of living alone (especially if widowed) people in retirement flats can make new friends and enjoy a far more sociable lifestyle.
Retirement flats also provide residents with an important sense of independence, which they perhaps wouldn’t get if they lived in a care home. This advantage is particularly important for people over the age of 70, who are reluctant to enter a care home and instead want their own living quarters.
Finally, retirement flats provide a higher level of safety and security than one might get in a regular flat. This is because a retirement flat is typically part of a bigger complex, which has security and safety measures guaranteeing the satisfaction of all its residents. Safety and security are particularly important for people of an older age, as they may be less physically agile than they used to be – and buying a retirement flat can provide an excellent solution to this.
Cons of buying a retirement flat
While there are some attractive aspects of purchasing a retirement flat, there are some drawbacks, too. These include:
- Service charges
- Difficult to sell
- Exit fees
In most cases, UK retirement flats are more expensive than the equivalent on the open market. This is due to the service charges which someone living in a retirement flat must pay. Most landlords will charge monthly fees for both maintenance and facilities available elsewhere in the complex. It is important to find out how much these costs will be before purchasing a retirement flat.
Retirement flats are also typically more difficult to sell, compared with a regular leasehold flat on the open market. This is mainly because the target market for this type of property is much smaller (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 – and, in addition, you will have to keep paying service charges while you are waiting for the property to be sold.
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’, and they are charged once your home is sold. These fees aim to cover costs associated with the upkeep for retirement villages, as well as to cover future repair costs. The details of these fees will be in your lease – so you should be clear on the terms before rushing into buying/selling a retirement flat.
Why Are Retirement Flats Not Selling?
A main reason that retirement flats are not selling is because the target market is smaller than any other property on the open market. For example, if a landlord is only able to 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 amongst an already reduced target market, the number of people searching for these types of properties is extremely small.
Another reason that retirement flats are not selling is that they do not always sell for the same price that they were initially bought for. There are countless examples of a retirement flat selling for less than it was bought for – and this is, in large part, due to the reason outlined above. The house-selling process can take ages, and there is a small group of potential buyers – and these two factors causes sellers to drop their asking price.
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