Retirement flats were not in demand during the pandemic as people were put off from moving. Many older people were fearful of catching the virus due to their age and health conditions, meaning potential buyers were reluctant to move into retirement properties.
In this blog we look at retirement flats and ask the question why are retirement flats not selling in the post-pandemic market?
There are a number of issues that can hinder selling a flat:
Selling a leasehold retirement flat
The majority of of retirement properties are leasehold. New builds are generally now offered with 999 year leases but other older retirement flats may have been purchased with a significantly shorter lease of 125 -99 years and this lease will have been running down whilst the owner lived there. Properties with less than 70 years can be difficult and extending the lease expensive. Our blog is it hard to sell a leasehold property goes into more detail.
Leasehold issues is one of the most common reasons putting buyers off retirement flats. Before buying a retirement flat check the lease. Of those flats with a short lease make sure you know what the costs are of extending that lease are and enquire as to whether it may be possible to extend it at point of purchase. If you don’t you will have to wait until two years of ownership before being able to extend it and every year the lease gets shorter the harder it is to sell.
Linked to leasehold are event fees. This is when the lease requires the property owner to pay a fee for certain events such as selling, sub-letting, or transferring ownership of the property. These fees are often a percentage of the resale price or market value of the retirement flat and can vary depending on how long you have lived there. Some companies charge as much as 30% according to Age UK. Similarly, these fees are known as exit fees, transfer fees, and assignment fees so watch out for them before purchasing. If you have them in your lease it maybe why retirement flat is not selling as quickly as you’d like.
Ground rent and retirement flats
Check your ground rent details as developers include clauses on leasehold contracts that has seen the fees skyrocket. The government has since stepped in to reduce ground rents on future leases, but it is important to check any clauses that signal increases in coming years. Unfortunately, if you find your retirement flat has one of these clauses it may be the reason why your retirement flat is not selling. A good flat selling tip is before buying make sure you understand what is charged initially and whether and how often the ground rent increases otherwise it could hinder selling your retirement flat quickly.
Another reason retirement flats are not selling is the service charge. This can be a significant expense given the level of services provided in a retirement property. Keep in mind that it is not unusual for the sum to be 4 figures, and this has to be paid every year on top of your other outgoings. Service chargers are also subject to increase.
When it comes to selling a retirement flat those with high increasing service charges may find it difficult to attract a buyer. Therefore, it is a good idea when considering buying a retirement property to ask to see the last few financial years of service charges. This will give you a good indication as to whether these are stable or have been increasing year on year. It is clearly very important to have fully investigated the service charges and be armed with this knowledge before purchasing a retirement flat as it could affect a sale in the future.
Selling a flat with restrictions on the age of that purchaser may be another problem selling leasehold flat. Most retirement flats specify a minimum age for the occupier which obviously limits the number of potential purchasers and people it can be sold to. At present there is no legislation limiting or preventing landlords of retirement flats applying age restrictions to their properties. The age restriction may answer the question as to why your flat isn’t selling – there’s simply a smaller potential audience.
How to sell a retirement flat quickly
If you’re considering buying a retirement flat, make sure to do your due diligence beforehand. If you come to sell in the future you will want to know all the facts and figures to help with transparency with potential buyers.
If you currently own a retirement flat and are struggling to sell, you may want to consider using cash house buyers like Gaffsy. We understand the time pressure someone owning a retirement flat is under when they need to sell. Gaffsy can make you a free cash offer today, meaning you can sell your house fast, regardless of the fact it’s a retirement property.