October 22, 2019

Retirement leasehold is a dud property investment, says Mail on Sunday

A bleak but truthful article by Richard Dyson in the Mail on Sunday analyses the plummeting values of retirement leasehold ­— and highlights the Campaign against retirement leasehold exploitation MPs’ meeting on Tuesday.

Most articles in newspapers about retirement property are just venal puffs that are run in order to bring in the adverts. Unwelcome though the message may be to existing owners, it is right to highlight that these properties are a wretched investment and best avoided.

For those who already own them, the essential course is to obtain right to manage, reduce management fees and then consider lease variations to make the site more attractive and saleable.

Campaign against retirement leasehold exploitation chairman Sebastian O’Kelly is mentioned as follows:

An expert in this field is former Mail on Sunday property journalist Sebastian O’Kelly, who today runs Campaign against retirement leasehold exploitation (Campaign Against Retirement Leasehold Exploitation).

He says: ‘Retirement leasehold is a spectacularly bad property asset that has fallen in value further than other residential property. The reason is clear: developers have encrusted the leases with sub-letting and exit fees and property managing agents have profited in every way possible.’

He cites examples where managing agents award contracts for insurance, CCTV and door entry systems to companies they also own.

‘The property industry has been so greedy that buyers have understandably lost faith,’ he says.

The newspaper article can be read here:

http://www.mailonsunday.co.uk/money/mortgageshome/article-2223970/Financial-prisoners-unable-sell-retirement-home.html

But the Mail’s money website Thisismoney reproduces fuller evidence of how retirement lease has fallen in value across the country. That can be read here

Or cut and paste: http://www.thisismoney.co.uk/money/mortgageshome/article-2223671/McCarthy–Stone-retirement-homes–happens-want-sell.html

 

Comments

  1. Well done the Mail on Sunday– as I drive around I see two new retirement leasehold buildings — finished around two years ago still haven’t sold a lot of the of their flats yet — I guess the words getting around about them being a bad investment!

  2. Very true comments at this time but it wasn’t always like this before the recession and the bank scandal.

    I bought a retirement flat in 2001 for £60,000 and sold it in 2005 for £125,000, thereby doubling its value.

    At that time the current comments about exit and sub leasing fees hardly got a mention as they got absorbed by the sellers profit and seem to be treated as de-rigueur for the transaction. That is not to say I’m agreeing to them though.

    That flat has gone back on the market around 5-6 months ago and after dropping in stages is now at £65,000 ?

    I’m not claiming any financial kudos for my investment/gain it was pure luck, but can’t we be optimistic and hope that stability will return to this sector and eventually happier days will return. The big question is HOW LONG must we wait ??

    • Kevin, Between 2001 and 2007, UK property was in the grip of a feeding frenzy, where mortgages were doled out like confetti. They were anomalous times, and they did not represent stability at all. The circumstances – huge growth in world wealth (from the non-West), trifling interest rates, full employment, double digit annual house price growth – may never return. The point is that retirement leasehold values have collapsed far further than most housing (and even further than inner city one/two bedroom flats).

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