RETIREMENT is a pivotal moment in everybody’s life and considering the best place to enjoy your twilight years is a huge decision for many people. Retirement flats and bungalows can be a great option. These are normally restricted to people over 55 or 60. But potential residents must be mindful that retirement property is sold on a leasehold basis and the rights and responsibilities of leaseholders differ to those of freeholders…

Scheme Management

A MANAGEMENT group tends to oversee the day-to-day running of retirement housing schemes. This is usually a private firm or a housing association.

Their responsibilities include insurance, upkeep of communal areas and repairs to the exterior and structure of the buildings. Householders have to pay a service charge to cover these costs.

It is important to discover who the managers are and what their background and experience entails. Find out if they are members of ARHMN (Association of Retirement Housing Managers). This group was created to maintain high standards of management in private retirement housing. Potential leaseholders should also find out if there is a residents’ association.

Service Charge

LEASEHOLDERS have to pay a service charge for the services provided by the management organisation. Make sure you are clear about the division of responsibilities between the management group and you the resident.

Residents are normally responsible for maintaining the inside of their flat or bungalow and sorting out their own contents insurance.

All management schemes should have a “sinking”, or reserve fund, to cover the costs of long-term repairs and redecorations. Contributions to this fund are sometimes made as part of the service charge payments.

Residents have certain rights, including a legal right to a summary from your management organisation of the expenditure and income of the scheme for the previous tax year. You also have the right to be consulted on how your service charge has been calculated.

Find out more from AIMS (Advice Information and Mediation Service for retirement housing), which offers advice to people who live in, own, or manage private retirement housing. Call 0845 600 2001.

Warden Service

THE majority of retirement housing schemes have a manager or warden. Their duties vary but details about their hours of service and emergency cover in the warden’s absence should be listed in the Purchaser’s Information Pack, also known as the Leaseholder Handbook.

The warden’s salary and any relevant overheads take up a large chunk of the service charge. And there are some schemes that may not even have a warden, which will inevitably mean a reduced service charge.

Financial Help

A FUNDING system called Supporting People can help towards the cost of housing-related support services. These include paying for the scheme manager and the emergency alarm service.

The help is available from local authorities, so if you are struggling to pay any supporting charges, contact your Supporting People team within the local council. They will normally assess your circumstances to gauge how much help you are entitled to.

Other charges

GROUND rent is another fee and is determined by the terms of the lease. You will also have to pay council tax, water rates, contents insurance, a TV licence for those under 75, telephone and fuel bills. Sometimes charges for water and fuel may be covered by the service charge.

Financial help is sometimes on offer to help pay for a TV licence or council tax.

If you are keen to renovate the property, you may also need to pay an administration fee to get consent.

Residents’ Protection

TWO main codes of practice protect residents’ rights in retirement housing.

The NHBC (National House Building Council) Sheltered Housing Code of Practice is applicable to retirement housing built after April 1990. Make sure you check if a developer is NHBC-registered.

The code pf practice tells developers to make sure residents’ rights are protected by a legal agreement between the developer and management organisation. A Purchaser’s Information Pack is given to all residents and the most important document is, of course, the lease itself.

The Association of Retirement Housing Managers (ARHM) Code of Practice regulates the private firms and housing associations that manage retirement housing. It covers issues such as the scheme manager service and the collection of service charges. The code also instructs that a management organisation should consult residents on all major issues, hold annual meetings and encourage the creation of residents’ associations.

The Purchaser’s Information Pack

WHEN a potential buyer pays a reservation fee, the freeholder must give them a Purchaser’s Information Pack, also known as a Leaseholder Handbook. The pack must include the following:

• Name and address of the freeholder and management organisation and the relationship between them
• Summary of your contractual rights as a leaseholder
• Details of all services provided by the management organisation, including the alarm call system, repairs procedure and insurance information
• Full details of all payments and fees residents have to pay and information about the reserve fund.
• Details about your rights if the property is resold

A Leaseholder’s Rights

A LOT of your rights as a leaseholder are covered by the law. Other rights depend on the terms of the lease that you sign.

A crucial part of the lease refers to your rights if you become poorly.

Sometimes there is a clause in the lease giving a landlord the right to seek termination of the lease. These termination provisions cannot normally happen without a court order and most management organisations only take action against a leaseholder if they are causing a serious nuisance to residents.

If the care you need can be provided in your home, the management organisation should help you set this up by arranging it with social services or the NHS.

More information on leaseholders’ rights are contained in Leasehold Retirement Housing: Your Rights and Remedies, published by AIMS in conjunction with AHRM and LEASE, the Leasehold Advisory Service. Call 020 7374 5380.

Having The Right To Manage

THE Commonhold and Leasehold Reform Act 2002 introduced the right to manage. It enables leaseholders to change their managing agents without the need to show serious fault at a Leaseholder Valuation Tribunal.

The right to manage needs the support of at least half the leaseholders. A firm limited by guarantee then has to be formed to exercise the right to manage. The Act also makes it easier for leaseholders to collectively buy the freehold of their block of flats/bungalows by cutting the percentage of those needing to take part from two-thirds to a half.

AIMS has the information sheets called The Right To Manage and Right To Manage Good Practice Guide. Call 0845 600 2001.

Freehold

OPPORTUNITIES sometimes emerge to buy freehold flats and bungalows which are part of retirement schemes.

Here, a buyer has got to sign a deed of covenant to accept management services from a provider. Freeholders in these cases don’t have the protection of leasehold legislation. But if the manager is an ARHM member, they will enjoy the protection of the Code of Practice.

Do not confuse these freehold properties with blocks of flats and apartments where leaseholders have exercised a collective right to buy the block’s freehold. Make sure you seek legal advice if you are thinking about this option.

Shared Ownership

IF YOU cannot afford the full market price you may be able to take advantage of Shared Ownership schemes. This could involve purchasing part of the property’s equity and paying rent on the rest.

These schemes may also be described as life interest plans or leasehold schemes for the elderly. One disadvantage would be if you wanted to move home again, so, once again, get the correct legal advice. More details are available from the Elderly Accommodation Council. Call 020 7820 1343.

Contacts List

Elderly Accommodation Counsel (EAC): 020 7820 1343, www.housingcare.org

AIMS (Advice Information and Mediation Service for retirement housing): 0845 600 2001, www.ageconcern.org.uk/aims

Association of Retirement Housing managers (ARHM): 020 7463 0660, www.arhm.org

Leasehold Advisory Service (LEASE): 020 7374 5380,
www.lease-advice.org

National House Building Council (NHBC): 01494 735363, www.nhbc.co.uk

Age Concern: 0800 00 99 66, www.ageconcern.org.uk

*Please note the details published on this page are targeted at people aged 50 or more and refers to the situation in England.

**Also, please note that the information included here may change from time to time, so please take legal advice if you are in any doubt.