Elderly face rising retirement housing fees
Charlotte Beugge, Money Mail - 11 August 2009
Elderly people who live in private sheltered developments are often trapped by rising fees which they can do little about.
Those affected are living in private retirement housing and pay a management company for charges such as maintenance, insurance, a warden and a 24-hour emergency call-out service.
But residents have little say on how much they pay, and many claim it's hard to work out if they are getting value for money. Residents can challenge costs only if they go to a leasehold valuation tribunal.
Typically, they pay from £2,000 to £3,000 a year to the management company, and charges tend to rise by more than inflation.
The biggest provider of these services is Peverel, which has about 85% of the market and looks after more than 200,000 individual residences.
The charity Age Concern & Help The Aged says the Landlord and Tenant Act 1985 specifies the charges must be reasonable.
The charity's director, Michelle Mitchell, says: 'We have dealt with many older people who have been angry about the level of charges levied on leaseholders in retirement properties.
'Concerns about apparent overcharging for the rent on wardens' properties have been one of the most common complaints. Peverel, Fairhold and the associated companies are the largest players in this market and the majority of complaints relate to them.
'We are very concerned that these charges are not properly regulated. Retired people should not have to go to [leasehold valuation] tribunal or exercise their collective right to manage their property in order to ensure the charges they are paying are fair. The Office of Fair Trading needs to step in to ensure potentially vulnerable older people are not being exploited.'
Edward Davey, Liberal Democrat MP for Kingston & Surbiton, wants to go further. He says: 'I have had a number of constituents come to me and I have been working for a period of time to try to get notice taken of their cases.
'The OFT tells me it is considering a background investigation into the whole sector. One issue is transparency on the fees charged and how they can be challenged.
'This whole sector could need regulating, because we are talking about an ever-growing area which is supplying a care service to a vulnerable group of people. It may be that we need legislation on this and this is something I plan to pursue at the next session of Parliament.'
Irene Moore's 84-year-old brother, retired tailor Sydney Koorlander, lives in a Peverel-managed development in Mr Davey's constituency. Mr Koorlander pays management charges of just over £2,000 a year for his one-bedroom flat.
In the current financial year, the total management charge for his development of 34 flats is £71,796. In the previous year it was £66,329, an increase of nearly 8 pc. Irene says: 'Elderly people choose to move into these developments because they want to feel safe.
'But the ones I've spoken to say they don't feel like they are in their own homes, because they have no choice or control over anything.
'I want residents to be given some say on which company they are insured with, who supplies their electricity and all other parts of the charge. It's not right that they have no say in the charges.'
Peter Wright has lived in a Peverel-managed property in South Devon for nine years. Mr Wright, 75, a former engineer, pays charges of about £2,500 a year.
He says: 'We've been without a full-time house manager for the past four months, but we have yet to get a rebate. It's difficult to get a breakdown of charges from Peverel.'
Another reader, who did not want to be named, has lived in a Peverel-managed property in Liverpool for 17 years.
The current charge for a one-bedroom flat ranges from £1,280.45 to £1,920.68, while a twobedroom flat costs up to £2,569.
From September 1, this will rise to £1,345-£2,018 for one-bedroom properties and up to £2,698 for those with two bedrooms — a rise of about 5%.
Ken Kilmister's mother lives in a Peverel-managed property in Surrey. With his help, she and her fellow residents challenged the amount of their service charge, which covered the warden's flat rental.
Mr Kilmister says: 'They were paying £21,500 a year for a two-bedroom flat, when we thought a market rent for the area was £12,000.' The group eventually got a refund of £31,500. A spokesman for Peverel says: 'Service charges levied by Peverel or any other property management company are covered by statute — the Landlord and Tenant Act 1985.
'Peverel goes further, however, and complies with codes of conduct and good practice of a number of relevant industry and professional bodies,
'The strict adherence by Peverel Retirement to these codes has meant its participation has been required in only three leasehold valuation tribunals in recent years, in which service charges have been an issue.
'All concluded that we correctly observed proper procedures and found in our favour.
'Peverel takes very seriously its responsibility to manage properties on behalf of all residents and the landlords who own developments.'