Retirement home companies exploiting older people

In a report called 'Putting retirement housing in order', published by the charity Age UK today, it says growing numbers of older people and their families are angry at the spiralling service charges and unfair fees they face when they sell or rent the property.

Over 200,000 older people live in private retirement developments across the country, buying their properties under leasehold. But while on the face of it these developments offer people a ‘burden-free' housing option, growing numbers of residents are living in fear of rising service charges and struggling to pay the increased costs.

From the 400 complaints about retirement housing which Age UK has dealt with over the last three years, the report highlights a number of key issues, including:

• unfair transfer fees of up to eight per cent payable to the management company when leaseholders come to sell or rent the property
• escalating and excessive services charges combined with a lack of transparency showing residents what they are actually paying for
• sky-high rents for scheme managers flats, which are out of line with rents for similar properties in the area
• failing to put services and insurance schemes out to competitive tendering, with some managing agents and landlords awarding contracts to subsidiaries of their own company.

Despite there being a code of practice for retirement home managers, the report highlights the lack of regulation in the burgeoning sector, which sees some companies ignoring best practice guidance and continuing to financially exploit older people. In addition, the legal system to challenge unfair leasehold terms is difficult to navigate, can be costly and doesn't set precedent, so people can be forced to return to the tribunals annually about the same issue time and again.

In response to the report, Michelle Mitchell, charity director at Age UK, said:

‘Retirement developments market themselves as a ‘burden-free living option', but in reality many older people are living in fear of bills for ever-increasing service charges landing through the letterbox.

‘These companies currently have a free rein to ride rough-shod over their residents and can hold them hostage to a range of unfair practices due to the lack of regulation in the sector. While many older people are fighting back, other more vulnerable residents simply aren't able to battle big companies in the courts and just want to be treated fairly.

‘The government urgently needs to review and regulate this growing sector to weed unscrupulous companies and restore people's confidence in the sector. With the over-65s accounting for almost half of all new households by 2026, a thriving retirement development industry is vital to house our ageing population.'

Age UK is urging the government to adopt a five-step plan to protect the 200,000 older people who are already living in these homes:

• government must urgently review and regulate the private retirement sector to ensure it complies with existing best practice.
• transfer fees should be abolished and a cap should be placed on management service charge increases
• a limit should be placed on the level of rent a landlord can charge for a scheme manager flat and this should not exceed market levels
• companies should be obligated to provide information on where to obtain expert legal advice on leasehold contracts to all prospective leaseholders
• managing agents should demonstrate competitive tendering practice around all service contracts.

The original report that this release mentions "Putting Retirement Housing in Order" published on 4 October 2010, contained inaccuracies. The link contained in this press release is to the revised and amended report.

Download the corrected 'Putting Housing Retirement in Order' report (PDF 127KB)

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Notes to editors

The report, putting retirement housing in order, is available by emailing vicky.smith@ageuk.org.uk.

For more information about moving into retirement housing, go to www.ageuk.org.uk or contact the free information and advice line 0800 169 65 65.

Age UK is the new force combining Age Concern and Help the Aged. The Age UK family includes Age Scotland, Age Cymru and Age NI.