Never, EVER buy property like this!
Never use part-exchange schemes
Don’t use a developer’s solicitor – that in itself is a disqualification
If you absolutely insist on buying retirement leasehold – as opposed to renting first – then buy a re-sale property, not a new one with a “value” that’s just a salesman’s try-on
Campaign against retirement leasehold exploitation has been contacted by a woman in this particular dilemma. It does not matter which particular retirement leasehold developer she bought from.
She bought an apartment in 2011 in this position – “and have been trying to sell it ever since, realising I had been ripped-off!”
“After being given the hard sell and how wonderful these places were, I was like a rabbit caught in the headlights and went ahead. I have regretted it ever since as there have been nothing but problems. These include a water heater boiling over at 3 am necessitating a call-out to the fire brigade, a leaking pipe (twice) under the bathroom basin, skirting boards/window surrounds cracking and water stains in the bath/basin. Worst of all, water has run down the outside wall from the gutters, which turned the wall green.
“I thought when buying the place that it would be ideal as it was new, I had no worries regarding repairs (or so I thought) and had all the facilities, help, etc. As I said, I was given the hard-sell by a sales assistant and, knowing I was on my own, I was an ideal candidate.
“I was also being messed about by the prospective buyer who wanted to purchase the property I was selling at the time. Her buyers kept letting her down and that is where XXX came into their own. I went for one of their part-exchange schemes.
“My previous freehold property was for sale at roughly £285,000. A property company recommended by XXX bought the property for £240,000, XXX gave me another £10,000 and I had to find another £19,000 (goodness knows how I found it) to make up the price of £269,000 for this apartment.
“I found out afterwards that the property company actually sold it to the same person who had messed me about (I don’t know how much for). You can say it was all above board but it leaves a nasty taste in the mouth.
“Yes, I did use the solicitor recommended by the developers, there is a 1% fee when I sell, which they say is for their contingency fund. There are 39 flats altogether and there are about 9 flats left. XXX has been trying to sell them since they were built and are so desperate to sell now that they are drastically reducing the prices just to get rid of them. It just goes to show they were never worth that amount of money in the first place.
“I will be lucky to get £180,000 if I sell. One agent has even suggested selling the flat at £150,000!”
Related posts:
My mum has seen a retirement leasehold flat and loves it, but what are the pitfalls?
Heirs of empty retirement leasehold flat now face doubled council taxes … on top of plummeting re-sale value, on-going service charges and an exit fee if it ever does sell
Contact Campaign against retirement leasehold exploitation before buying a leasehold retirement flat, says Daily Mail
Your Housing Group shared equity retirement flat sells for £39,000, after three years on the market
The only way to get over losing heavily on a resale would be to get the terms of the lease altered.
Get an agreement so that the leasehold developer will purchase back the property at somewhere near to the original sale price if the resident is unable to sell on the open market. If 90% recovery was agreed this would at least give some peace of mind.
Micheal, do you know of this actually happening?
A situation that’s not unfamiliar unfortunately. All flats here have had various building related problems, but were sorted out during the first two years as part of the guarantee. After that time you’re on your own, can’t always rely on the House Manager for help. As for the value of flats declining so drasticly, this seems to be the norm.
I have never heard of one of the run of the mill retirement complex developers adopting a buy back at a fair price policy but it would be worth trying.to negotiate with them.
if the properties are as good as their salesmen say then they should hold their price and they would benefit by being able to sell all the properties quicker.
I do know there is a large charitable organization which develops retirement village complexes where is is compulsory to sell back to them at the purchase price. There is however a 10% Exit Fee.
I always thought this was a rip off but compared to the above lady`s experience it sounds more reasonable especially if prices are falling.
Michael, the 10% Exit Fee you refer to would, as you say, be better than losing around 40%. The potential buyers of retirement apartments are gaining more knowledge of this market, and who can blame them for not buying, even pre-owned. ‘Carefree Living’?