Key Considerations When Selling a Retirement Property

A retirement apartment or house in a dedicated retirement village can reduce the practical burdens of home ownership, like grounds maintenance, and provide access to additional services such as social events. Alongside accommodation for independent living, there may also be options for supported living and further healthcare services, enabling someone to remain in a familiar setting, even if their health support needs increase.

On the flip side, their specialised nature can make these properties more difficult to sell when the time comes. This may be further complicated if a family member, or someone with a power of attorney, has to undertake the sale due to the resident losing their mental capacity or if their health has deteriorated and they need to move to accommodation with the next level of care.

‘Selling a retirement property can certainly be challenging,’ explains Amy Priest, a Partner in the Residential Property team. ‘Restrictions on who can live in the property may limit your pool of potential buyers. In addition, there may be extra steps to take or fees to pay before you can sell. Every situation is different, and getting the right advice tailored to your needs is key.’

Amy outlines the key considerations when selling a retirement property.

Be clear about the issues that affect your property

It is important to understand the type of property you are selling, and this should determine your approach. For example, if you are selling a freehold bungalow, which is not part of a retirement complex, it should not be too different from any other conventional sale. On the other hand, if the property is a dedicated retirement apartment or a house, it is likely to be leasehold with special provisions that reflect its dedication to retirement living.

One of the main attractions of a dedicated retirement village can be the flexibility it offers as you age and your needs change. This could be the provision of a care package or even the option to move into an onsite care facility. However, it is still important to understand the terms of the lease, and any agreement with the home provider, as these are likely to impact on the sale.

Typically, the lease will restrict occupation to those over a certain age, and the landlord may need to approve the new owner. Like most leases, there is likely to be an obligation to pay a service charge to cover maintenance of any common parts, as well as the provision of additional services, such as a residents’ lounge, monitored fire alarms, a warden or 24-house emergency call system. This means the service charge can be higher than for a conventional property, which may affect its appeal to some buyers.

Some retirement leases also provide for an exit or ‘event’ fee (sometimes also called a ‘deferred management fee’). This is payable before you sell the property, and sometimes on subletting as well. Typically, it will be one or two per cent of the sale price. Occasionally it can be significantly higher, particularly where the provider offered a lower price on the initial purchase. Other providers may operate a guaranteed buy-back scheme which, after deductions, pegs the price to that which was paid initially.

The individual provisions of any scheme can be complicated, and it is important to be clear on the terms which apply. For example, if a move into an onsite care home in the retirement village is needed, the provider may treat this and the associated sale as two distinct transactions. Any event fees would be payable, just as if you were moving elsewhere. Other providers may waive a portion of these fees in these circumstances. Knowing the terms of your lease, and the attitude of the provider is key. This will allow you to factor any additional costs into your plans.

A solicitor who is experienced in this specialist area can advise you on provisions that could be problematic for a buyer, or which restrict who you can sell to. While they may not be able to change what is in your lease, they can help you to understand all your options and to manage your sale proactively.  

Plan ahead, do your research, and do not be afraid to negotiate  

Selling a retirement property generally takes longer than a conventional home. There are, however, things you can do to expediate the process. For example, it will help to assemble the relevant papers in advance. If the property is leasehold, you will need to give the buyer a leasehold information pack. This will include details of any ground rent and the service charge. Some retirement complexes also have their own management information packs, which you will need to provide. These can take a while to obtain, so it makes sense to ask the landlord for copies early.

You should ask your solicitor to check the title for any issues and consider whether there have been any breaches of the lease terms. For example, if alterations have been carried out without the landlord’s consent, where consent is required. In that case, you may want to consider applying for consent retrospectively or taking out insurance cover. Discussing these types of issue with your solicitor before putting the property on the market will help ensure a smooth sale.

Council tax and service charge may continue to accrue on an empty property, and this can quickly become a burden. Some councils may agree to exempt a retirement property from council tax in certain circumstances, for example, if it is being actively marketed or in the case of probate. You should be able to find this information on the relevant council’s website but, if not, ask them. Service charges are usually strictly governed by the lease and are payable whether the property is occupied or not. However, some providers may agree to charges being reduced or deferred, for example, until you receive the sale proceeds. So, it is worth investigating this possibility.

Acting for the legal owner

Selling a property that belonged to another family member will involve additional issues. For example, if they are no longer capable of managing their own affairs, you will generally need either a lasting power of attorney or an order from the Court of Protection. If the owner has died, then usually the property will form part of their estate. It will then be their executors who sell it, and they will need a grant of probate.

In these situations, it is essential to follow all the correct legal procedures, and you should discuss matters with your solicitor ideally before marketing the property. The additional steps will affect the timeline of your sale, and you will need to consider this in conjunction with other aspects of ownership. It is important to have solicitors on board who can offer a holistic approach. They should understand all the facets of the situation, not just the conveyancing. For example, delay in getting probate could delay your sale, with service charges mounting up and depleting the assets of the estate.

Choose your professional advisers with care

Retirement properties are different from regular homes, and it is important to choose professionals who have the right expertise.

Some retirement leases may require you to offer your property to your provider first, with the ‘sale proceeds’ being calculated in accordance with the terms of the lease. Others may require you to use your provider’s inhouse resale team, at least for a set period. Discussing your individual situation with your solicitor early on should clarify any restrictions on how you market your property.

If appointing your own estate agent, you should choose someone experienced in this sector. Understanding this specialist market will maximise your chances of a successful sale. If deciding between an independent agent and your provider’s inhouse team, check their respective terms and conditions carefully and compare the service they offer before committing yourself.  

Most importantly, ensure you have the right solicitor on board. Transferring ownership of a retirement property often involves additional steps, which will need handling efficiently and tactfully to keep your sale on track. Your solicitor should be someone who understands these and who is responsive to the special demands of selling a retirement home.

How we can help you

Here at Sills & Betteridge we have wide experience of selling all sorts of retirement properties and understand the challenges involved. To discuss how we can help you, please contact Amy Priest in the Residential Property team on 0115 941 1469 or email APriest@sillslegal.co.uk. Sills & Betteridge has offices in the East Midlands, Lincolnshire and Yorkshire