July 20, 2024

ARHM cannot see a future in traditional ‘granny flat’ volume retirement sales

Annual conference hears why renting, mutuals or guaranteed buy-back schemes are more attractive than leasehold flat sales

Not one attempt was made to defend the volume retirement housing business model as it came under sustained attack at the annual conference of the Association of Retirement Housing Managers last week.

The keynote speaker Sebastian O’Kelly, of LKP / BetterRetirementHousing.com, told the conference:

“The era of knocking out ‘granny flats’, loading the leases with sneaky fees and flogging off the freeholds to murky speculators is not the future.”

The term “granny flats” was used by the pioneer of the retirement housing market back in the 1980s.

Which way for retirement housing? Professor James Driscoll, who spoke in favour of commonhold tenure; barrister Amanda Gourlay; Siobhan McGrath, president of the property tribunal; and Jeff Platt, veteran commentator on leasehold housing issues

Veteran leasehold sector commentator Jeff Platt, who runs Section 20 Limited https://www.section20.uk/, also had no positive statement to make on the practice of people in advanced old age making an expensive property purchase.

“We rent our mobile phones; we lease our cars,” he told the conference. “Why on earth would someone in their mid-eighties want to buy a property with a 125 year or 999 year lease? It makes no sense.”

Curiously, this view was echoed by barrister Justin Bates (right), who is employed by some of the more controversial freeholders in the game.

“Why pay into a service charge for a roof that might be needed in 20 years’ time?” he said. “To enjoy your retirement you do not need to own a significant property asset.”

Renting made more sense, but Mr Bates also suggested that mutually owned co-operatives could also be an answer.

BetterRetirementHousing.com has warmly applauded the residents at Woodville Valley Village who have achieved precisely this at their site outside Stroud in Gloucestershire:

Woodchester Valley Village: How we turned a disaster into the first mutually owned retirement village – Better Retirement Housing

MPs were told yesterday of how residents took control of a bankrupt retirement village, raised £2 million and turned it into the first mutually owned retirement site in the country. Professor Peter Wilson told the Campaign against retirement leasehold exploitation / LKP roundtable, hosted by the charity’s MP patrons Jim Fitzpatrick and Sir Peter Bottomley, …

Astonishingly, not one voice was raised to advocate in favour of the volume retirement housing building model, as practised for years by builders such as McCarthy and Stone and Churchill.

Indeed, on the day of the conference, McCarthy and Stone announced its plans to enter the retirement rental market with housing association Places for People.

Places for People to manage funds for retirement house builder

Inside Housing, news, analysis, and comment about the social housing sector in the UK.

There was praise for renting models: Mr Bates pointing to research that highlighted how over-60s were far more amenable to renting their homes compared with the under 35s.

Mr O’Kelly raised the ExtraCare Charitable Trust and Methodist Housing Association models, which both buy back properties they have sold for 95 per cent of the price.

“This means the tenure is really a short term tenancy,” said Mr Platt.

The dismal picture of retirement re-sale values, based solely on Land Registry prices, has been raised many times by www.BetterRetirementHousing.com, notably here:

Abysmal retirement housing values revealed on the Land Registry – Better Retirement Housing

Campaign against retirement leasehold exploitation examines official re-sale prices for McCarthy and Stone, Churchill Retirement Living, Audley Retirement, Retirement Villages, Retirement Security, Anchor and Pegasus A dismal picture of retirement housing values on re-sales is revealed by Campaign against retirement leasehold exploitation from figures in the Land Registry.

That article highlights the example of Risingholme Court in Heathfield, East Sussex, a 47-flat scheme built by McCarthy and Stone in 2007.

Here Flat 25 has collapsed from a first sale when new of £225,688 on April 29 2008 to £61,500 on November 25 2015.

That’s a loss of £164,188 in seven years.

McCarthy and Stone says www.BetterRetirementHousing.com is “slanted” and the picture is not as bad as we state.

Campaign against retirement leasehold exploitation is ‘slanted’ over retirement resale prices. The picture is more positive, says McCarthy and Stone – Better Retirement Housing

Statement from McCarthy & Stone The majority of properties managed by McCarthy & Stone have increased in value when resold (based on data relating to managed properties resold in 2016 to-date) and historical data suggests around a third of all our properties outperform their local market.