Has something gone wrong in the retirement leasehold sector?
Over ten years ago, my grandmother bought a leasehold flat in a block built for retired people. She was very happy there, as she had less to worry about, help on hand and actually felt far more independent than before. My brother and I looked after her financial affairs and there was never any real problems with either of the firms who managed the block whilst she was a resident.
So you can gather from this personal experience that I’m a fan of retirement leasehold homes and know there are many good landlords and managing agents out there.
However, over a year ago two constituents contacted me within a short time of each other, with serious complaints over unfair treatment of retired leaseholders – in one case, their mother, in another, their brother.
My work for them exposed me to a huge number of similar cases across the country and has compelled me to support a national campaign to stop the exploitation of some retired leaseholders by what seems to be a relatively small number of companies.
What’s wrong?
High charges are by far the biggest complaint. They can be high service charges, with a variety of causes from inflated insurance premia to inflated rents for the flat for the house manager. Or they can be high charges when someone seeks to sell a lease.
Of course, the law does provide for redress – either in the form of a hearing of the Leasehold Valuation Tribunal or in legislation that gives leaseholders “the right to manage”.
Yet my research suggests that many leaseholders in retirement blocks find it difficult to use these routes –whether on cost grounds or problems getting enough leaseholders to come together to exercise their rights. Many retired leaseholders can be worried or fearful of taking on their landlord or managing agent whilst often it can be a mixture of ignorance that they are being ripped off or simply inertia that prevents action.
The Association of Retirement Housing Managers does have a code of practice and if fully enforced this would probably be preventing much of this overcharging. Yet it’s clear the Code lacks real bite.
A way forward
Inevitably with this type of problem, one is dealing with such broad generalisations that the first task must be to get as accurate a picture as possible – to get agreement on how widespread these problems are and their precise nature.
So I have two immediate objectives – first, to see if the Office of Fair Trading will undertake a sector-wide review, as some of the concerns relate to the structure of the market, especially the large market share and business model of one big player, the Consensus Business Group; second, to ensure that Government looks far more closely at this.
Perhaps small changes may help - like fast-tracking retirement leaseholder cases before the LVT. Or may be we need more root and branch regulation. Either way, we have to tackle the causes of any abuse, before the wider sector is damaged.
BBC Money Box
I was interviewed for BBC Radio 4's Money Box about this problem.
You can hear the interview by clicking here. The item starts 13 minutes 25 seconds into the programme.
