August 11, 2022

Pay back my £1,150 exit fee, or we are off to court

Susan Wood

Veteran Campaign against retirement leasehold exploitation supporter Susan Wood is considering legal action against the retirement development landlord Fairhold on the thorny issue of exit fees and wants back £1,150.

The case concerns her deceased father’s flat at Kings Court, in Sheffield, where Wood and her two siblings were charged two per cent exit fees on sale.

One per cent of this went to the contingency fund at King’s Court. But the other one per cent – £1,150 – was supposed to be used in order to assess that the incoming resident was suitable for “independent living”.

Wood argues that no such checks were made and therefore she and her siblings should not have been charged.

It is an interesting case because later this month the Office of Fair Trading is to make a “substantive statement” on the subject of exit fees which it has been investigating for an astonishing three years.

In 2009, the OFT questioned McCarthy and Stone – which built King’s Court – about the fees on the grounds that they could represent an unfair contract term.  McCarthy and Stone agreed not to impose them in existing leases in January 2009 [see below], where it was still the landlord, and not to put them in any new ones.

The fees are very lucrative and, in the case of Fairhold, underpin the securitisation they issued.

The OFT noted the announcement on April 10 2012 through the Irish Stock Exchange by Fairhold Securitisation Limited. “The announcement refers to the discussions between Fairhold companies and the OFT with respect to the OFT investigation into the charging of transfer fees in the retirement housing sector.

King’s Court, in Sheffield, was built in 2001 by McCarthy and Stone, and flats were sold with the exit fees in the leases. They were probably a major attraction for companies that hoovered up the freeholds.

“We can confirm that the OFT has been in negotiations with Fairhold about changes we consider it should make to the way it enforces transfer fee lease terms and what future leases should include. Legal restrictions prevent us from commenting further at this stage as the investigation has not been concluded.”

Wood said: “Landlords have repeatedly told leaseholders that they must pay up any number of fees because they are ‘in the lease’. Well, it’s in my lease that these checks should have been made and they weren’t, so I want the money back.”

“We are taking this action on a point of principle, and if we are successful, we’ll be giving the money to a charity of our choice.”

The wording in the lease

Not to agree to assign underlet or to make any other material change in occupation or otherwise part with possession of the Premises without first having given at least 28 days prior written notice to the Landlord or its ageny of the Tenants intention so to do (together with details of the proposed assignee underlessee or occupier and his/her solicitors (if any)) so that the Landlord can endeavour to ascertain whether the assignee underlessee or occupier (as appropriate) is capable of maintaining an independent and active lifestyle taking full advantage of the facilities offered on the Estate whilst occupying the premises and subject to clause 10.6 at completion of any such transaction to pay to the Landlord a transfer fee of 1% of the gross sale price or open market value (which in default of agreement shall be determined by the Landlord’s surveyor) whichever shall be the greater sum (together with such Value Added Tax or similar tax as may from time to time by law be required to be added to such fee) and subject as aforesaid if the transfer fee shall i not be paid within seven days  of the said assignment underletting or parting with possession then the said fee shall be due and payable by the assignee underlessee or occupier as the case may be …

McCarthy and Stone dropped exit fees in January 2009

14 January 2009

The OFT has secured an agreement from a major builder of UK retirement apartments to amend its leases, especially in relation to the re-sale of properties.

McCarthy and Stone plc has agreed to remove from future contracts, and not enforce in existing contracts, a term in its leases that involved charging consumers a ‘transfer’ fee of one per cent of the sale price when the property was subsequently sold. The OFT considered this term was likely to be in breach of the Unfair Terms in Consumer Contracts Regulations 1999 (the UTCCRs). The company said that it did not agree with the OFT’s view but co-operated with discussions and agreed to the changes. The company has also agreed to amend various other terms.

The OFT has raised the issue of ‘transfer’ fees with the proposed body that will be responsible for delivering a code of conduct and redress scheme in the homebuilding industry, which has agreed to consider the matter and facilitate discussions with the industry. This body is being formed in reponse to the OFT’s Homebuilding market study.

Mike Haley OFT Director of Consumer Protection said: ‘These changes will benefit thousands of elderly and potentially vulnerable residents selling their homes. We are pleased that the changes have been accepted and implemented without the need for further action by the OFT. Moving forward, we welcome the opportunity to work with the code body for the homebuilding industry as a means to improve lease agreements across the sector. ‘

Comments

  1. Has Peverel ever stated that half the exit fee is to cover the cost of vetting new purchasers to see if they are suitable for retirement living?
    It is not now possible to prevent anyone purchasing a property whatever their condition. As it was many years ago.
    Peverel states that the exit fee is determined by the developer as part of the terms of the lease and there is nothing it can do about it.
    This makes the situation very confusing. Who actually receives the fee and what services are provided for this payment?
    Regards
    Michael Hollands