They demand the protections of variable service charges under LAFRA
Audley Retirement admits that capital projects have been deferred ahead of its merger with high-end Elysian Residences, and ‘we are now planning our capital expenditure programme for 2026 and beyond’
Audley Retirement agrees that there should be ‘appropriate recourse in the event that services are not delivered to a standard agreed between owners and managers’ at retirement community sites
Its trade body the Association of Retirement Community Operators is apparently in discussion with government officials over precisely this issue, it is claimed
Leaseholders in upmarket retirement flats run by the Audley Retirement are mutinying over what they claim are inflated service charges and declining standards.
Some leaseholders, whose average age is 83, claim that service charges have increased by 33.8%.
They say the money is being used to prop up Audley, where sales of new flats – typically priced around £500,000 – are claimed to have diminished, rather than providing the promised services at its 21 sites across the country that are home to 2,500 residents.
Audley has denied this in a five-page response sent to LKP (below).
However, it has acknowledged that capital projects were deferred in preparation for its merger with luxury retirement operator Elysian Residences last year.
Audley says that its service charges rise in aligment with either RPI or the Average Weekly Earnings index, as set out in the leases.
“We have never issued an unexpected bill to any of our customers for major works, emergency repairs, cost overruns etc and we are able to offer lower monthly fees to ‘asset rich, cash poor’ older people,” Nick Sanderson, Audley CEO, tells LKP (written statement below).
Nonetheless, the leaseholders have raised their concerns with housing minister Matthew Pennycook and, they claim, 13 MPs. Last week Audley representatives met Lord Truscott, the non-aligned co-chair of the All Party Parliamentary Group on leasehold and commonhold reform. Further meetings with MPs are planned.
In one email to Mr Pennycook, the leaseholders have claimed that “trust has been betrayed, because Audley is no longer able to meet either its service levels, or its financial obligations”.
The pensioners are publicly speaking out because they cannot challenge the service charges in the property tribunal like other leaseholders.
The monthly management charges are not variable service charges: they are effectively a leap of faith in the retirement community operator to deliver what it has promised. The only recourse would be a civil action for breach of contract if specified services were not provided.
The monthly charges are supposedly kept relatively low – rising with inflation and staff costs – but when the flat is sold an additional exit fee is charged – more delicately termed a ‘deferred management fee’ – which is also for no defined services.
These are a percentage of sale price rising to 15% after 15 years of occupancy at Audley sites. Other retirement community operators have higher percentages.
In return, the site operator pays up for all the shortfalls, such as major works bills.
The retirement community operator business model appeals to asset rich and cash poor retirees.
Audley offers a variety of services – restaurant, gym, pool and even care provision – typically clustered around a period country house.
The business model here is long term care and management, in contrast to housebuilder companies such as McCarthy and Stone and Churchill Retirement, which sell off new independent living leasehold flats at a premium, which pre the ban in 2022 included high ground rents of around £500. Until the practice was stopped in new leases in 2012 after an investigation by the defunct Office of Fair Trading, the leases could also include a 1% exit fee paid to the freeholder for nothing at all. The income streams in ‘independent living’ leasehold retirement flats made the freeholds attractive to financiers such as Vincent Tchenguiz, who owns the older McCarthy and Stone freehold portfolio.
Around 60,000 older people live in retirement communities, while a far larger number, around 250,000, live in retirement independent living flats.
The Audley leaseholders responded to last autumn’s government consultation “Strengthening Leaseholder Protections”, in which they argued forcibly that leaseholders in integrated retirement communities should enjoy the protections of Leasehold and Freehold Reform Act 2024 and its secondary legislation.
On the other hand, a variable service charge regime is precisely what the Audley leaseholders chose to forgo when they signed the leases, with legal advice, that allowed fixed management charges.
Meanwhile, Audley’s trade body the Association of Retirement Community Operators is continuing to lobby government to exclude integrated retirement communities from the protection of the Act.
The ideal form of tenure, in ARCO’s view, is a licence to occupy, along the lines of the New Zealand and Australian retirement communities, which is more akin to club membership than a property purchase. It is not altogether clear to LKP how residents would be better protected under such a regime, especially as ARCO operators clearly prefer to have services as undefined as possible.
However, ARCO has voiced strong criticism of the high ground rents in retirement housing and deprecated the sectors’ many abuses, including appalling resale values.
Audley has existed for 30 years, beginning in Tunbridge Wells, and runs a mid-market provider Mayfield. In July last year it merged with luxury retirement provider Elysian Residences, which has a portfolio of 11 retirement villages in London and the South East, with a total sales value of over £1.3bn
It says that its business model “is distinguished by its focus on the development and long-term
operation of our schemes, together with the retention of a direct financial stake in their success”.
Retirement flats are notorious for their catastrophic resale values, but Audley claims that 80% of its 452 resales over the past five years were for higher sums than the original purchase price.
In its statement (in full, below, at point 1) Audley did not acknowledge the leaseholders’ claimed 33.8% annual increase in management charges, but said that costs have “significantly increased” owing to staff National Insurance and National Minimum Wage increases, coupled with energy price rises.
“Our mechanism for increasing costs is clearly identified in our leases and would have been a central consideration for solicitors advising our purchasers,” Audley says. “In addition, it is prominent in pre-contractual information provided to our customers well before a commitment is made to buy or rent, as the ARCO Consumer Code requires.”
However, it adds:
“It is correct that we do not produce details of the actual costs of operating our villages as that is not a direct interest for owners given the charge increase is determined by independent indices specified in the lease.”
The Audley offer removes buyers concerns about “unknown or unpredicted cost increases as would have applied had we adopted a Service Charge and Sinking Fund model”, the company claims.
Mr Sanderson says: “I want to underline that never, in Audley’s 30-year history, have we charged leaseholders for unexpected repairs, maintenance or other emergencies that would have led to additional bills issued under a traditional variable service charge model and which, as you know from the campaigning work of LKP, have caused such problems in other parts of the housing sector.”
This is one of the principal reassurances of the Audley and the wider ARCO business model.
“Nevertheless, we acknowledge that during the last 12 months, certain capital projects have been deferred ahead of the merger of Audley with Elysian Residences and the finalising of the financial arrangements of the merged company,” Mr Sanderson explains. “That process will be completed imminently, and we are now planning our capital expenditure programme for 2026 and beyond.”
Unlike service charges, the management charges at Audley are not for specified services stated in the lease.
Mr Sanderson explains: “It is correct that our income from both monthly and Deferred Charges is pooled for collective use.”
If there is any excess in the management charges the lease itself states that the “Management Company shall be free to deal with such excess as it sees fit and shall not be required to retain the whole or any part of it or account to the Landlord the Tenant or to the tenants or occupiers of the Dwellings in respect of it”.
Mr Sanderson rejected an argument put forward by the Audley leaseholders that charges must be “expended in a specific year for specific purposes”.
Audley dismissed the argument that management charges have been used to bolster Audley during a period of faltering sales by stating that “since 2019 we have been developing new sites in joint ventures with major UK institutional investors, meaning that sales are accounted for outside of Audley Group”.
While LKP pointed out that Audley ground rents – which are also for no specified services – were around £500, creating new ones have been banned since the 2022 Act and Audley did not argue for retirement properties to be exempt, unlike both McCarthy and Stone and Churchill Retirement.
In common with other housebuilders, Audley does recommend conveyancing solicitors to buyers – a practice LKP has long deprecated as the lawyers risk being stooges in the sales process – but they “operate independently and provide personalised advice”.
“I am also fully supportive of the view that protection for those who live in the villages operating under that model should have appropriate recourse in the event that services are not delivered to a standard agreed between owners and managers,” Mr Sanderson says.
“This is something we and our colleagues at ARCO will continue to progress and promote with Government officials.
“As you will know, ARCO was founded by its members in recognition of the lack of regulation and legislation for the retirement housing sector in the UK, and to address the negative outcomes this was producing for customers and their families (LKP and BetterRetirement Housing have of course been instrumental in documenting these issues and pressing for change). More work is required in this area.”
Unfortunately, Mr Sanderson did not elaborate on what protections might result from further deliberation by ARCO.
LKP has broadly welcomed the ARCO / retirement community operators long term business model compared with leasehold retirement housing. We particularlY welcome operators like the Extra Care Charitable Trust, an ARCO member, which buys back its flats at 95% of the initial purchase price, which secures resale values and allows families quickly to move on.
Some families have been burdened with retirement flats by other providers that have plummeted in value since new and remained unsold for years: this is a particular issue with shared ownership properties.
On the other hand, LKP has been contacted by sites run by an ARCO provider where capital expenditure has been unexpectedly high resulting in appeal to leaseholders to agree a massive hike in the exit fees: which have shot up to more than 20% in at least one site.
If these retirement community operators run out of money, it is no great surprise who ends up being asked to make up the shortfall. In such a scenario, residents also have to balance the efficacy of litigating against the site owning company: if it becomes unviable, the quality of life of the residents is hardly likely to improve.
It is for these reasons that LKP has always regarded purchases of properties in highly managed retirement communities as a leap of faith in the provider – several of which are charities.
There is scope, however, in defining the services offered as comprehensively as possible: so that if they deteriorate or cease, the charges can come off the bill.
A final point, in fairness to Audley, is that its leaseholders have linked up with each other effectively thanks to the company’s own residents’ forums, which includes a representative body of all the sites in the country. In other words, Audley has made it easy for the leaseholders to communicate with each other.
In most blocks of non-retirement flats, of course, the freeholder’s appointed managing agents go to considerable effort to frustrate efforts by leaseholders to communicate with each other, form residents’ associations or organise collective action, such as right to manage.
After all, it is when leaseholders act collectively, that they can be most effective against their landlord.
The full statement from Audley Retirement can be read here:
https://www.leaseholdknowledge.com/wp-content/uploads/2026/02/FINAL-LKP-Sebastian-2.pdf
Related posts:
My granny’s Audley Retirement home ‘was a money pit’ costing £48,000 in exit fees
Retirement housing won’t grow until oldies are offered a product that they can trust, says head of ARCO
APPG July 11: Retirement fees whether ground rents or event fees need to be for designated services not open-ended profits, says AgeUK
Fryzer Property Services lifts ‘ban’ on relatives at major works meeting
Speak Your Mind