May 26, 2024

Trapped in a Retirement Villages site: once you are in, how do you escape?

RetirementVillagesThe following is from  residents in a Retirement Villages site, who are trapped as exit fees are a staggering 12.5 per cent.

Selling up in such circumstances is very difficult, leaving aside the likelihood that capital values have almost certainly taken a hard hit.

It is difficult to advise in these circumstances.

Retirement Villages are upmarket, resort sites usually centred around a grand house. Rather than a property purchase, people are really buying into a club.

This is quite well established in the US.

High exit fees in themselves can be a good way of paying into the contingency fund, easing the burden of high yearly service charges. There is no evidence that Retirement Villages has ever sought to hide its very high exit fees.

Probably the only way you could challenge them is if you can demonstrate fault: that the quality of your life has been affected by Retirement Villages itself.

The sad truth is that the idea behind these fees is that once you arrive at one of these places, you only leave feet first.

Campaign against retirement leasehold exploitation has suggested political pressure via MP and Sir Peter Bottomley.

Any other advice for this reader?

 “We live in a Retirement Villages in xxx owned by Retirement Villages UK and have been in contact with the Office of Fair Trading since they began their investigation into Retirement Home Exit Fees.  Some residents here were interviewed and we, at the request of the OFT, sent them a copy of our lease.    We have read with interest their final report on this investigation but are disappointed to note that the only companies mentioned in it are those that build retirement homes and not villages.

As we have a 12.5 per cent exit fee, we are obviously very anxious to know whether, in view of the conclusion reached by the OFT that these fees are unfair, we can take any action in order to negotiate a lower percentage with our freeholder?   Taking the company to court is out of the question as we could not afford this.

Recently the Chief Executive, Mr Jon Gooding, has resigned but on several occasions when asked by residents what this exit fee is for, he has made contradictory statements.

Originally he said that in assessing the price at which units were initially sold no account was taken of the cost of construction of the Clubhouse, Restaurant, Laundry, Snooker Room etc. and, therefore, this cost and its financial servicing remained a substantial charge against the parent company  (all these facilities are situated within the main apartment block buildings and we know that the high cost of the properties would have easily covered this cost!)

Another time he told us it was to maintain (we do pay a high service charge which supposedly covers this) and improve the site and yet when the communal patio was enlarged a couple of years ago the company refused to pay the whole cost and the Residents Association had to pay half.

Then, more recently, he admitted it was to keep the shareholders happy!!   Nowhere in our lease does it state what this exit fee is for!

Unfortunately our Residents Association Committee have taken it upon themselves, without a mandate from the residents, and have had a consultation with the Chairman of Retirement Villages Ltd.

They have told us we should abide by the terms of the lease, which we have all signed, and pay the 12.5 per cent.

They are concerned that if we ‘rock the boat’ the company may take action that will disadvantage us even more and, therefore, many of our elderly residents are now worried as to what will happen if we do challenge the company.  However, there are many residents here that wish to take some sort of action in an effort to have this very high unfair exit fee reduced.

Maybe you could offer us some advice?  Incidentally, we did have several conversations with Melissa Briggs when she was chairman of Campaign against retirement leasehold exploitation.

Kind regards



  1. Which party gets the exit fee ? How many flats in your village ? How many years on your leases ?

    What are you paying for annual ground rent and annual service charge ?

    If you can muster 50% support , you can replace the existing Management Company by a RTM company which is controlled by the leaseholders.

  2. Ollie – In answer to the above questions, Retirement Villages Ltd. get the exit fees. There are 85 properties which include flats, bungalows and cottages.

    There are 125 years on the lease. We pay ground rent of £275 p.a. and the service charge this year is £3,729.85 + £300 for double occupancy.

    We are informed by RV that the exit fee is to maintain and improve the site but according to our lease the service charge is for maintainance and refurbishment. There is no space on our site to add further facilities and when we did enlarge the communnal patio RV refused to pay the full cost of doing so. The clubhouse is too small to accommodate all 115 residents and RV have refused to enlarge the bar area and also improve the acoustics in there.

    Since 2009 there have been 8 resales and there are now four more properties for sale. Bearing in mind how much RV have taken in Exit fees from this Village alone, it seems outrageous that they will not spend
    on a few minor improvements here..

    The grounds are attractive with trees, shrubs and lawns which are kept immaculate by our excellent maintenance staff. Unfortunately, we cannot describe our office staff as excellent!!

    Retirement Villages Ltd. are our Landlords and also the Management Company.

  3. Campaign against retirement leasehold exploitation says

    What has been the result of the re-sales? Do they demonstrate a significant fall in values?

  4. 1. Are the bungalows and cottages under the same 125 years lease as the flats and paying £275 per year ? Or are the bungalows and cottages each under freehold title tied with service agreement .

    2. What are the current market values of your flats, bungalows and cottages ?

    3. if the current value of the flat is £200K and lease still has over 100 years remaining, I would estimate the exit fee would cost the individual seller ( executor / heir ) 12.5 % x £200K = £25K each.

    4. If the flat owners ( leaseholders with over 100 years lease ) are willing to contribute to collective enfranchisement ( buying the freehold of the flats ) the cost per flat would be about 20-25 times £275 annual rent = £6875 . Would all the leaseholders agree to pay this for collectively buying the freehold to remove the exit charge from the lease and RV from your site ?

    5. Owners of leasehold houses can buy the freehold title under the L&T Act 1967 but I would need more info to estimate the cost. for buying the freehold.

    6. You need to buy a copy of the freehold title and site plan from Land Registry online to understand who owns the freehold titles for the RV estates.

  5. Timothy Bobbin says

    I have owned in both Retirement Villages and (McCarthy & Stone) Peverel managed. So why has there been all the shouting about the latter re. (1+1) 2% exit fees? Surely, everyone who bought into these locations knew about exit fees?
    The trouble is, purchasers were riding on the crest of the property price inflation boom and exit fees were negated. Now, the inheritors of such properties are faced with ongoing management fees and exit fees on a declining market, all of which have to be funded by (largely) families – mainly middle income- who are themselves trapped in today’s financial environment. Personally, I found both situations very acceptable, but you do need to plan and can only reiterate -work out the system and use it to your own advantage.

  6. Exit fees do not appear in leases for mainstream market of flats ( in non-retirement blocks). It seems the developers of retirement housng have added “exit fees” to leases to boost their own profits.

    Exit fees inserted in the leases do not give any extra benefit for the buyer. So why should buyer pay for it to be included in your leases ? OFT have asked developers not to include this in new leases.

    Yes – its a poor deal for the retired buyer and an extra sting on the family savings. And 12.5 per exit fee is not only a big sting, its a huge rip off.

    “Purchasers of retirement flats are now faced with ongoing high service charges and a sting of exit fee in declining property market” – don’t understand why Timothy finds both situations very acceptable.

    Not much business sense for anyone to say exit fees acceptable.

  7. Campaign against retirement leasehold exploitation says

    I have come across a grade ii listed building in Bury St Edmunds, non-retirement, where the 12 or so flats owned freehold and they set up a high exit fee quite voluntarily to pay into the contingency fund.

    Of course, a voluntary arrangement such as this has nothing in common with the scale of the exit fees which were introduced into the retirement sector because … well, because the developers could get away with it.

    Anchor Trust reaped the benefits of pooled contingency fees for years, and still have not been made to pay the money back. If there is a barrister in the house, wanting to making a name, this would be a good cause.

  8. michael hollands says

    Developers have probably been able to get away with exit fees on retirement properties as they are purchased by the elderly. The elderly considered them a final resting place not considering what happens when they die.
    Ordinary apartments would normally be purchased by younger persons as a step on the housing ladder, so they would not put up with it as they would eventually want to resell their properties.
    I am sure the developers took all this into account when looking for an easy way to make money.
    Now things are changing. many of the residents of retirement properties have died and their families have had to pick up the bill, made worse by falling property values.
    So the Exit Fee has become a charge not for exiting the apartment , more for exiting this world and came as a shock to those who inherited it.

  9. Michael Epstein says

    There is of course a world of difference between an “Exit Fee” that is paid into development service charge funds and an exit fee paid direct to a freeholder. The former can mitigate the monthly outgoings on service charges, the latter appears only to be designed to increase freeholder’s profit.
    Campaign against retirement leasehold exploitation and others, have highlighted the dramatic falls in the values of retirement properties.
    However, the financial institutions are also very aware of how poor an investment in retirement property is.
    In yet another blow to those already suffering, it has come to my attention that residents who had planned to take out an annuity on their property are being declined as the institutions do not believe retirement property prices will increase.
    In some cases, those with an existing annuity, who decide to move to a retirement flat find that they cannot transfer the annuity and are faced with paying many thousands in redemption charges.

  10. Have today received a copy of the minutes of a Committee Meeting, on the 3rd June, of our Residents Association. In it the Committee state that they will not hold a ballot, which many here had requested, to ascertain whether there are a majority of residents that wish to confront Retirement Villages Ltd. Management regarding the OFT report on Exit Fees. How democratic is this!!!

    The minutes quite clearly indicate that the Committee have no real understanding of the whole matter and have no intention of acting in the interests of us all. They continually state that each resident willingly signed a legal contract to pay the current 12.5% exit fee and we must accept that. Many of the other comments are spurious and obviously intended to frighten some of the residents.

    The Committee also stated that at a meeting with Mr. Welby (Chairman of Retirement Villages Ltd.) he frankly admitted that the inability or unwillingness of banks, at the present time, to lend money was forcing RV to rely on exit fees as a major source of income with which to meet their liabilities’!!!

    The Secretary of the Association said in a letter to a resident that RV’s business plan would be in tatters if the exit fees were reduced or removed as RV Ltd. needed these monies to develop on land they had already purchased. Therefore, we must have sympathy with them!!

    Understandably many of us here feel very frustrated.

  11. In reply to Ollie’s questions asked on the 3rd June, all properties in this Retirement Village, which includes bungalows cottages and flats, are leasehold, with the same lease paying £275 per annum.

    Current values of the properties are between £200,000 and £350,000. It is becoming more difficult to sell just lately. One bungalow has been for sale for over a year. It is now more obvious that local residents are aware of the high exit fee and, on some occasions, those coming to view the properties for sale decide not to buy because of the high 12.5% exit fee! It worries us, therefore, that in the future our properties will become virtually unsaleable especially as the OFT wants retirement companies not to include a fee in the leases of new developments. McCarthy & Stone are now building in two areas close to us which will, of course, mean competition.

    I agree with you that the way forward for us would be for all residents here to buy the freehold of their property. However, I know that many would not want to do this. Many are in the 80s and 90s and are fearful of change.

    I think the only way forward for us is to do as the Chairman of Campaign against retirement leasehold exploitation has advised and contact our local MP and Sir Peter Bottomley and put our case to them.

  12. Based on current values between £200,000 and £350,000, the 12.5% exit fee will cost the “seller” or their heirs somewhere between £ 25,000 and £ 44,000 . But if all 85 leaseholders are willing to club together and pitch an offer around £275 x 20 =£ 5,500 each to collectively buy the freehold, they can change the rules.

    Usually some leaseholders will refuse to participate , but the majority of you will have good business sense and be willing to contribute a bit more to cover those who have poor business sense. Even those who are 80 years age or more will see the sense to contribute to protect the value of their property ,

  13. Michael Epstein says

    What a very good idea!
    Especially if the rules could be changed to the effect that no exit fees are payable by freeholders, but still apply to leaseholders? After all, this would only be a continuance of the terms of the lease.

  14. After your group of leaseholders have collectively bought the freehold , the participators would stop paying 275 pds annual ground rent and you should find some savings in the annual service charges say about say 20% which means about 900-1000 pds savings per year.

    So if your leaseholders proceeded to collectively buy the freehold title, you may find the contribution cost at 5500 pds per leaseholder will be recovered by the annual savings in little over over 6 -7 years.

    Collectively buying the freehold title gives the participating owners the right to decide what annual payments unde the lease can be stopped. Its same as if you had bought a freehold house, you have the power to decide what payment you wish to change.

  15. Michael Epstein says

    May i remind anyone who buys the freehold, do not forget to create and grant yourself a 999 year lease.
    I have heard of people who having bought the freehold neglected to do this.

  16. Hi Ellie,

    What year did your 125 year leases s commence ? and when does the next increase to annual ground rent hit you ?

    Leases are legally recogniised binding contracts in any court and making a complaint is unlikely to help you.

    If you have the high exit fee in your leases , and you all have concerns it will make the properties unsaleable for everyone, then your leaseholders have no choice but to collectively buy the freehold and change the rules.

    You need to canvass every leaseholder and get their agreement to each contribute approx 5500 towards buying the freehold. Even 80 -90 years olds ( or their adult children) must be convinced to contribute .

    When you go round canvassing , you can identify the ones who are willing and can be elected onto the residents committee to take charge and move forward to a better future.

    • Have read your latest comments, Ollie. and totally agree that we should buy the freehold of our properties. However, as I mentioned before, our Residents Association Committee are behaving in an arrogant undemocratic manner. They have refused to hold a secret ballot or a meeting to discuss the situation. Unfortunately, many of the residents have no real understanding of the matter and confess to being frightened of the consequences if we were to ‘break away’ from R.V.Ltd. Therefore, those of us that would be in favour of buying the freehold know that we would be unable to get a majority to agree.
      We have received the minutes of the last Committee Meeting and are appalled at the ludicrous comments made in support of R.V. and the exit fee. I quote one paragraph from these minutes verbatim. “The existence of a substantial Assignment Fee may deter some purchasers but may equally attract others by ensuring that the initial payment is competitive with other similar accommodation in the area. The most significant threat to the prospect of a sale is the atmosphere of uncertainty generated by the uninformed public activities of organisations such as Campaign against retirement leasehold exploitation”. !!!

      We can only hope that, as a result of the publicity and the findings of the OFT’s investigation into unfair exit fees, R.V. Ltd. will have to eventually reduce their fees in order to sell their properties.