Owners of retirement flats and their families are being caught out by unexpected charges hidden in leases.
Leases of retirement flats and bungalows often include a fee triggered by certain events, such as when the owner sells or sub-lets their property. These “event fees” are typically set at around 1% of the property sale price but may be as high as 30%.
Event fees can be a practical way of making retirement flats affordable, particularly for older people with low incomes, because they can defer the running costs until the property is sold. But owners and their families are often not told about the fees until after they have agreed to buy the property and, when they sell, they may be shocked at how high the fees can turn out to be.
The Law Commission is presently looking at what can be done to protect consumers from unexpected leasehold event fees (which include “transfer”, “contingency”, “deferred-management” and “selling-service” fees). The Commission asks:
- should developers, landlords and managing agents of retirement flats do more to make potential buyers aware of event fees at an early stage,
- should this obligation be extended to estate agents, and
- how far can this be achieved through industry codes of practice?
The Commission provisionally proposes measures that developers, landlords and managing agents should take to make event fees more transparent, and asks whether the courts’ power to control unfair fees should be strengthened.
It is vital that independent legal advice is sought by anyone looking to enter into a lease. Our experienced team, would be be happy to advise on any such issues, please contact them here.