If you’re approaching retirement and want to live independently in the future,  but with the option of support if you need it, you might want to consider buying a flat or house in a retirement village.

Retirement villages are property developments built specifically for people in their mid-50s or above. They tend to come with on-site care facilities and may even have communal leisure areas, such as swimming pools or gyms.

However, buying a flat in one of these developments isn’t without its disadvantages, not least that they can be seriously expensive – even when you aren’t using them. This guide will fill you in on all the pros and cons of buying a retirement flat.

What is a retirement flat?

A retirement flat is different to a normal flat in that it is designed for use exclusively for people in their 50s and above.

There is typically a lower age limit of 55, meaning the only people below this age in the retirement village will be those who work there. The staff may include a manager or warden for the building or village who can provide extra support at certain times of day. Properties also tend to be fitted with an alarm system for extra security.

Retirement properties are normally leasehold, which means you are not buying the property outright – rather you are buying the right to live there for the length of the lease. You can read more about this distinction in our article What is the difference between leasehold and freehold?

Some retirement buildings or villages come with more communal facilities than a normal block of flats or estate, such as dining rooms, living rooms, a pool or cinema.

Retirement flats are not the same as care homes, which are designed to provide continuous care and tend to have staff available at all hours of the day. Retirement villages are designed for those who want to live independently with minimal care, although many retirement villages also have properties to accommodate those in need of greater support.

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Are retirement flats expensive?

Retirement flats tend to cost more than a normal flat, both in terms of the purchase price and ongoing costs that you may need to pay. On average, a retirement flat in England costs around 17% more than a standard flat of the same size, according to research from real estate firm Jones Lang LaSalle carried out in 2018.

Since you are buying a leasehold rather than freehold, you may be expected to pay ground rent to the landlord or freeholder. Recent changes introduced by the Leasehold Reform Act mean landlords are prohibited from charging ground rent on new leases on most residential properties. For retirement properties, however, this will not come into effect before April 1st 2023.

Retirement villages usually charge a regular service fee for things like buildings insurance and property maintenance, as set by the company who manages the retirement village. This can vary dramatically in price and may increase at any time. It’s important to carefully check the service charge, what it includes and whether it has risen in the past few years before you commit to a retirement property. Higher-end developments with lots of facilities will tend to charge higher fees.

If you pay a service charge in a leasehold property, you have the right to ask the landlord for a summary showing how the charge is worked out and what it is spent on, with receipts – they cannot refuse to provide this. You should also ask whether any major changes are planned in the next few years which could substantially bump up the cost of this charge.

You may want to check that the company that manages the property is a member of a trade association that requires its members to follow the RICS Service Charge Residential Management Code; this means that these companies will have to adhere to the standards of fairness and transparency laid out in the code when charging for service.

There may also be an exit charge to pay when you sell the property, also known as an event fee or deferred management charge. This can be calculated either as a percentage of the property value or as a flat fee, with the percentage rate sometimes increasing year on year. This can become very hefty indeed, so read the contract carefully to see what the conditions for selling the property are – for example, some villages will increase the fee year on year, and may not include a percentage cap. In addition, some retirement villages will only allow you to sell the flat through their own estate agency, which may charge higher sale and admin fees than other agencies.

Bear in mind as well that if you move out of the property before selling it, you will still be responsible for paying service charges until you find someone to buy it, even if the property is sitting empty in the interim. These charges continue to be payable even after the owner dies, meaning that if you die without selling beforehand, your next of kin will have to make these payments and figure out how to sell the property.

For all of these reasons, you should be very careful when thinking about buying a retirement property, making sure to research the company and check the contract in detail. Even if the purchase price seems affordable, consider the service charges and how the exit fee is calculated before going ahead, or a retirement property could become a serious money pit for you or your relatives.

What to look for in a retirement flat

If you’re keen to buy a retirement flat, you should think carefully about your expectations and needs so that you can buy one that suits you.

There’s lots to consider when it comes to finding retirement living, whether this is a property or care home. Does it meet your needs? What activities are on offer? How much will it cost? This is where Lottie can help. Lottie care seekers save more than £5,000 on average care home fees. Get in touch with Lottie to see how they can help you.

If you are interested in a particular property, you may want to research the company that runs the building or development and see if they have been reviewed positively or negatively – if they have poor reviews or any kind of bad reputation, you may want to steer clear.

Consider too what kind of facilities and services you require. You may want somewhere with access to plenty of leisure facilities and shared spaces, in which case you will probably need a higher budget. Or you may want a building where a warden or manager is always on hand, in which case you should check how long they’re there each day and what their responsibilities are.

You should also check whether the company running the development is a member of a larger professional body which holds its members to certain standards or a code of conduct. These include the Association of Retirement Housing Managers (ARHM) and the Association of Residential Managing Agents (ARMA). ARMA members are required to prove their managerial experience, have Professional Indemnity Insurance, and comply with the RICS Service Charge Residential Management Code.

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Can I get a mortgage on a retirement property?

It is possible to get a mortgage on a retirement property, though your options may be more limited compared to buying a normal residential property.

This is mainly because lenders assess the resale potential of a property when deciding whether to offer a mortgage on it. The age restrictions and highly specific market on retirement properties – combined with sometimes steep service charges – mean that they can be more difficult to sell, which may put lenders off.

Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage. If you’re looking for somewhere to start, you can speak to a Rest Less Mortgages advisor and get high quality advice on residential, retirement interest-only, equity release and buy-to-let mortgages.

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If you’re still on the fence about whether to move, our Five questions to ask yourself if you’re considering downsizing your home might help make the decision easier.

You can also read about how to manage your pension and other finances as you approach retirement in our Approaching retirement section.

Many people over 50 are put off remortgaging because they don’t think they’ll be eligible for a new deal due to their age. However, there is a growing range of options available to homeowners in this age bracket, which you can read more about in our articles Mortgages for over 50s: What you need to know and Mortgages for over 60s: what you need to know.

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