Boost for retirement housing supply

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Boost for retirement housing supply

Published 15 April 2019

The Government has now responded to the Law Commission’s recommendations on event fees in retirement properties, confirming that it will enact the recommendations on event fees in full, with the exception of two issues which the Department of Communities and Local Government has deferred to be explored in further detail.

Most specialist retirement properties are sold on a leasehold rather than freehold basis, and many of these leases require the owner to pay a fee on certain events – such as sale, sub-letting or change of occupancy, known as ‘event fees’.

In 2013, the Office of Fair Trading investigated the use of transfer fees (a type of event fee). They found that terms in leases imposing this type of event fee were potentially unfair, and as a result, in 2014, the Department for Communities and Local Government asked the Law Commission to investigate.

The Law Commission’s research found that in some cases event fees could be hidden in complex leases, that they might arise unexpectedly (for example when a spouse or carer takes over a property), that they are often disclosed too late in the process for the consumer to take the fee into account, and that if consumers do spot event fees, they may fail to appreciate their financial consequences.

Recommendations range from the regulation of event fees with the introduction of a new code of practice and limiting when an event fee can be charged (and in certain situations, the amount that can be charged) to imposing strict obligations on landlords to provide transparent information about the event fees early in the purchase process.

The Minister for Housing and Homelessness Heather Wheeler MP confirmed that the government would be implementing the recommendations with the exception of two issues that would be explored further.

The two outstanding items include:

  • further research to understand the best means to establish an online database providing information to prospective buyers; and
  • further consideration around spouses’ and live-in carers’ succession rights to stay at a property without payment of an event fee.

The Law Commission comments that as well as providing consumers with transparency on which to base informed choices, the recommended reforms intend to reduce the uncertainty currently surrounding the legal status of event fee terms and to support private investment of £3.2bn which stakeholders have told them is likely to be forthcoming in the next decade, enabling the supply of specialist retirement housing to be expanded significantly to support the ageing population.


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