April 24, 2024

Pensioner loses £130,000 to escape Roseland Parc Retirement Village. But it is worth it, she says …

A leaseholder in Roseland Parc Retirement Village, Cornwall, is facing a £130,000 loss on a £350,000 flat in order to move out, but says it is worth it.

Eileen Osborne, 72, moved into the property more than 10 years ago, but has now purchased another home locally and has moved out.

She is trying to sell the flat for £275,000, but when she does so she will have to pay 12 per cent of the price as an exit fee to Retirement Villages Limited.

The case illustrates the punitive effect of high exit fees if you change your mind, or circumstances change, and you have to leave a site where they apply.

Retirement Villages, which was bought by insurer AXA for around £100 million in 2017, owns and manages 16 sites around the country, with 2,000 residents, and has a further five committed new sites mainly in the South East.

Retirement Village Cornwall – Tregony | Roseland Parc

Roseland Parc delivers the perfect retirement lifestyle – whether residents seek complete independence or prefer to tap into a range of hotel-style services as and when they need them. The choice is entirely their own.

Mrs Osborne informs www.BetterRetirementHousing.com that “a good third” of the flats at Roseland Parc are empty. She also claims that in the past Retirement Villages has purchased flats of residents wishing to leave, but won’t do so in her case, or in some others.

“I have known of cases where people have moved out having to pay up for years, or families of the deceased having to find the money to pay for years while Retirement Villages just rake in funds for nothing.”

www.BetterRetirementHousing.com contacted Will Bax, CEO of Retirement Villages, with the correspondence copied to local Conservative MP for Truro Cherilyn Mackrory, Michael Voges, chief executive of the Association of Retirement Community Operators, and LKP patron MPs Sir Peter Bottomley, Justin Madders MPand Sir Ed Davey.

It has decided to suspend Miss Osborne’s service charge obligations until she achieves a sale, at which point they will be paid.

Mr Bax replied: “It is true that property values at Roseland Parc have fallen in recent times, with resales tracking at an estimate of 7% discount over the past 10 years.

“Currently, village occupancy stands at 82%. In this sense it is something of an outlier within the RVG portfolio. Again the context is relevant and is rooted in a large expansion in retirement home supply in Truro (+100 units) since 2014.

“That said we have generated several viewings and we have contacted Miss Osborne to better understand her position and her concerns.

“Given the presence of a care home on site, Roseland tends to attract an older customer, who values proximity and availability of high acuity care on site. At 71 [now 72] years old, Miss Osborne is younger than most of our community here and places less value on the amenities, care offer and community available here.”

Mr Bax said the company has offered Miss Osborne assistance in achieving a sale, but blamed Covid for the lack of interest in the last 12 months.

“We believe a particular challenge is the timing of her proposed sale. The last six months since the property was placed on the market have undeniably been a difficult time to be selling, while January is never an easy time and the country is in its third lockdown. These factors will be weighing on valuations and in generating interest not only at Roseland Parc but at other retirement villages.”

However, all resales at Roseland Parc, which has 59 flats and bungalows, have been at a loss compared with the price paid when new according to the Land Registry:

  • Number 38
    Transaction history
    A 2008-10-24 £325,000
    A 2007-10-19 £349,000
  • Number 33
    Transaction history
    A 2013-08-02 £190,000
    A 2009-06-11 £220,000
  • Number 34
    Transaction history
    A 2018-04-12 £180,000
    A 2012-01-04 £210,000
    A 2010-07-15 £195,000
  • Number 36
    Transaction history
    A 2018-02-23 £265,000
    A 2010-12-08 £299,950

Mr Bax that Retirement Villages was now selling properties with 999 year leases and no ground rent: a key distinction of ARCO retirement community operators compared with retirement housebuilders such as McCarthy and Stone and Churchil Retirement.

“These leases also include a new innovation – a ‘put option’ – that gives customers the ability to ask us to buy back their property at the original purchase price, less the event fee, therefore giving them complete confidence in their investment,” said Mr Bax.

These leases will apply at Retirement Villages new site Gradwell Park in Sussex.

Mr Bax added: “We are also seeking to incorporate the same protection as a variation to the current leasehold models on existing villages where RVG is selling properties that are in our direct ownership.

“I agree that where business models benefit from patient capital, this approach offers the right long term alignment between operator and owners. Hence our decision to offer such protection. However, realistically not all developers/operators are capitalised in a way that will support such an approach.”