July 21, 2024

My mum has seen a retirement leasehold flat and loves it, but what are the pitfalls?

Any words of advice for this reader poised to buy a retirement leasehold flat?

(Please do not grandstand or name individual companies: helpful advice only, thanks.)

 Last week we went with my mother to view a retirement leasehold site in Cornwall.  We were all very surprised to be so impressed by the quality of the development and she immediately decided to reserve one of the few remaining two-bed flats. 

 We were pleased we did, as the next day was their open day and another three went.

 There remains a high level of customer interest in the development. 

 We are sure that, from a living point of view, the move will be great for her, a very active 84 year old, and give her much more social contact than she has at the moment as she feels isolated in a development consisting almost entirely of holiday rentals. 

She has already been to coffee mornings at the site and met some of the other new residents, so she is mentally very committed to the move already. 

Our reaction to the sales staff and management at the property has so far been very positive as they seem very professional and genuine.

We have been quoted a price of £269,950 for this very spacious apartment with lots of light and a large south-facing balcony.

We have paid a £350 reservation fee until October 6th to determine with other members of the family whether we want to finance the purchase via the sale of her existing property or by cashing in some investments and renting her current house. 

The developer will give us a £10k discount if we are cash buyers. At  the moment we are tending to think that it would be more straightforward to go down the usual route of buying and selling. 

I have just come across your site and wondered if I could be put in contact with anyone who has had recent experience of new retirement leasehold developments, so we can be aware of the pitfalls. 

I know that you do not recommend getting involved in leasehold arrangements of this kind, but I think that it would be psychologically extremely difficult to change my mother’s mind at this stage. 

Questions I have, include:

What room might there be for negotiation around the asking price, given the apparent strong interest in the development?

Are there risks in using the “partner” solicitor (in this case a named independent firm)?

Many thanks for any advice or warnings available out there.


Campaign against retirement leasehold exploitation’s recommendation would be to rent and, failing that, not buy new build where values are simply what the sales team chances. We would also favour housing association over commercial housebuilder.

 It is possible that the other flats are selling well but – if so – why are they offering a discount?

 You must assume a high loss in value on a new retirement leasehold flat – most are still 40 per cent off peak.

(One in Rutland which cost £400,000 is now on the market for £250,000 and has been on the market for six years at a cost of £36,500 in service charges. This is obviously the high end of the market.)

 Most large retirement housebuilders manage their own blocks (as they once did in the past). But these management services are largely post housing boom and are tiny compared with Peverel’s 1,466 blocks.

 Typical wheezes include: very low trade-in prices for part-exchange sales (avoid at all costs, search Channel Four Despatches on Campaign against retirement leasehold exploitation); building with sneaky revenue generating clauses in the lease (the most blatant – exit fees – have largely been stopped on new projects by mainstream builders, but the consequences of them we are still living with); and flogging off freeholds to the highest bidder at auctions, who will then monetize.

It would be nice to see retirement builders building commonhold or – if we have to have leasehold – leases including a residents’ management company in the lease so the residents are empowered from the start. It only has to make one decision: appoint a managing agent of its choosing.

 A developer-recommended solicitor is IN ITSELF a reason not to use the firm. Find a proper solicitors’ firm that is used to dealing with leasehold.

 Regarding exit fees, these are typically two per cent: one per cent exit fee that was just an earner (which has largely gone), and one per cent for the contingency fund (which Campaign against retirement leasehold exploitation has never disputed).

 You should regard this as a lifestyle choice more akin to joining a golf club than a property investment. There are plenty of posts on the Campaign against retirement leasehold exploitation site showing that these can be a problematic purchase and inheritance. It is very unlikely that the price of this flat will have risen in five years time.


  1. Michael Epstein says

    There are many advantages for living in retirement developments, many of which have been highlighted in the question.
    You should be fully aware of the cost implications of purchasing new build.
    I would look at a similar new build apartment that is not in a retirement home. This will give an indication of the true premium being asked for. ie if an equivalent apartment can be purchased for £189,950, the premium you will be paying is £80,000. You should look at the financial performance of other retirement developments. Have they lost value? Bear in mind also, that like buying a new car, which loses value as soon as you drive off the forecourt, so new build retirement developments have lost value as soon as the shine wears off.
    Clearly, you need to make yourself aware of service charges and possible exit fees. More important, you should visit other developments to see for yourself how they have been run.
    i feel you have already made one inadvertent mistake. That your mother has already made friends at the new development is a recognised sales tactic designed to put moral pressure on you to accede to your mother’s wishes.
    With regard to selling or renting the former home, that depends on personal circumstances. What would prove very expensive is to sell to the developer. You should also use your own solicitor.

  2. Campaign against retirement leasehold exploitation says

    From Michael Hollands

    (there appears to be a glitch over comments – hopefully temporary)


    I think the most important thing to you is your mothers welfare and happiness.
    The type of lifestyle the well managed complexes offer seem well suited to her.You will not get this in a non retirement complex.
    The same happened to my mother at 80 years old and she never regretted it.
    You will read about the many problems with Retirement Leasehold on this website and no doubt will receive adverse comments.
    The price will be high as it is new and if sold in the next few years will lose value. But prices are beginning to rise again particularly in Cornwall.
    You would also have to pay exit fees probably 2.5% in this case as I can guess who the developer is.
    The Management Fee also has to be paid until the property is sold
    I suggest you get your own solicitor ,one who is experienced in this type of property. At least he will inform you of any pitfulls in the Lease so you will be aware in the future.
    I think that the developer will have built plenty of margin into the price for negotiation, but if they are selling fast then it will be more difficult.
    I suggesttrying to increasethe discount for cash. Try £30000.
    Everyone is now aware of the problems with Retirement Leasehold ( including the Government) so things can only get better.
    One day, in the distant future, if you find the lifestyle good you may take occupation yourself.
    Please let us know how you get on.

  3. Trevor Bradley says

    Excellent advice from Campaign against retirement leasehold exploitation and Michael Epstein. My mother lives in retirement leasehold (20 years) in Warwick and my wifes auntie is in one in Safron Waldron.
    One thing is definite the Lifestyle can be great, repeat can be, BUT, in all cases it comes at a cost. Like a car the more you pay the more you lose. It is not like buying a private house that normally increases in value.
    Only enter into it if you are happy to end up with very little regarding original investment etc.
    My daughter is in Cornwall and I am there a lot. I know where you are considering. I know the market.There are no seconhand retirement leasehold for sale at anywhere near their original purchase prices in Cornwall, which is very very normal.
    Some that sold for £225,000 10/12 years ago can be bought now for £85K. Would you be happy with that – if so, go ahead
    On top of that are you happy that the service charges are so high because they put high “commission/markup” on things like buildings insurance, communal electricity and gas, contractors repairs etc.
    Basically you need to be prepared to accept, and financially able, to lose a massive amount of money to enjoy this type of lifestyle

    • Trevor Bradley says

      Just an update and bit more info to help anyones decision.
      My mothers apartment is in the Warwick Kenilworth area. Good affluent area. Nice place to live etc etc. House prices over last few/couple of years have slowed/stabilised but not gone down like many areas have.
      Most people don’t know what the word recession or hard times means, so it is not “flooded” with house/apartment sales.. My mothers apartment was £185,000.00 20 years ago. The flat next door to here has finally sold today for £115,000.00 after being on market for over 18 months.
      If you bought a private house 20 years ago for what my mother paid i don’t think you would be selling the house today for £115k. It would be more like £395k. I hope this puts things into perspective on how much it really costs to live in retirement leasehold.
      Yes, it can be, repeat, can be a wonderful lifestyle but until the government intro legislation to stop all the rip offs and scams it will always be a mssive loss financially.
      As my uncle once said about buying a place in Spain years ago – only buy it on the understanding that if you loose everything it will not affect you or your familys life

  4. Also seriously consider the financial implications that will happen when you or your dependants have to sell the flat which is going to occur one way or another inevitably.

    Not only loss of equity on the resale value, as noted above but the continuing cost of Council Tax and Service Charges until it is sold.

    Campaign against retirement leasehold exploitation’s mantra above is is cast iron logic from years of experience. DO NOT BUY LEASEHOLD.

  5. Karen
    Here at ABC development we have seen a ground floor flat recently sell for £79,000 and a first floor flat sell for £85,000 which is 30% less than the value. My relative paid £139,000 for a one bed third floor flat in a near development which similar has sold for less than £90,000, they were built by M.S.

  6. Campaign against retirement leasehold exploitation says

    The original questioner says “thanks”. Quite rightly, too, these were excellent answers from Campaign against retirement leasehold exploitation readers: considered, unemotive and of practical use. So many thanks from Campaign against retirement leasehold exploitation, too.

    “Many thanks for this, and for the comments already posted. We will consider all the points made very carefully, and whatever we do in the end, at least we will be going into things forewarned and with our eyes open!”

  7. michael hollands says

    Our original enquirer must noe be concerned with the information he has received.
    As a business proposition buying new is not good, but this has to be balanced with what is right for his mother.
    I have looked into some of the current prices for this type of 2 bed property, which by the way, are always considerably dearer than 1 beds both on price and management fees.
    M&S prices at Newton Abbot and St Ives are around £250000 new.
    But if you look on their website you will find many resales all over Cornwall at reduced prices.
    There may be a similar cheaper alternatives which are just as attractive to his mother.
    On the Retirement Homesearch website there are 2beds in Bodmin,Cambourne,Newquay,Truro and Penzance at prices ranging from £60000 to £140000.
    They will be Peverel managed and not managed by M&S.
    If renting is considered as an alternative, unfortunately these seem to be scarce.
    GirlingsRental have 1beds at Truro ,Bodmin and Launceston at between £425 and £725/month.
    No management or Exit Fees with these.
    Most of these properties can also be seen on the Rightmove website.

    If none of the above is suitable perhaps our enquirer could use the information as a bargaining chip when purchasing the property he has already chosen.

  8. Before you buy and sign the sale contract , get your solicitor to vet the lease and remove any unfair contract terms .

    The exit fee was declared by OFT to be an unfair ciontract term and M&S have agreed to drop this term for new properties. Your solicitor can insist it be deleted .

    Also for subletting consent or transfer of flat , get the notice fee reduced to 40 pds.