to be disgusted at having to pay fees for a deceased family member

[LK2610]

I’d really appreciate any advice you can give. Our lovely grandad passed away 1 year ago. He lived in a block of ‘supported’ apartments for the elderly. Unfortunately my parents are struggling to sell his flat due to the slow housing market. It’s been empty for almost a year.

The thing that shocks me is that my mum is still having to pay a full monthly service charge for the apartment, even though it’s empty. It’s costing hundreds of pounds a month and soon my grandad’s estate will have run out of money. The building managers refuse to let my mum have a discount on the charges, even though half of the things my grandad obviously can’t use.

This charge includes things like water, electricity, TV licence, daily food in the restaurant, cleaning, 24/hour support, emergency call system - obviously he’s no longer using these things.

She’ll also soon have to pay full council tax on the flat because she can no longer benefit from the 1 person discount because my grandad is no longer here. This shocked me the most. It feels so insensitive, like a punishment for him not being here.

I’m sad that she’s being forced to pay all this money at such a difficult time (she’s still very upset) that she and my dad could have, as I’m sure my grandad would have wanted.

Has anyone else been in a similar situation? I’ve suggested she gets legal advice but that’s more costly and she’s in her 70s so it’s quite stressful for her.

The proceeds of the flat are part of the estate. The executors can pay until those are all gone.

There will always be naive, stupid and feckless people @Testina so I guess there are still people buying off plan. These properties might just make sense to someone with no children to leave their money to but not to anyone who has.

Your car analogy doesn’t stack up. You treat your car as a consumable but most people don’t, they upgrade every few years and use the residual value of the old car as part payment towards the new one.

Say I sold my house for £300k and bought one of these flats for £150k. The service charges are £5k a year so if I live in it for ten years it’s cost £200k. I die and my heirs can’t sell it so they continue paying service charges for another couple of years - another £10k. Eventually it sells for £110k and the company takes another £1k. It’s now cost £211k and lost over £100k. That’s a massive loss over ten years.

I’d be going there everyday and using the facilities she’s paid for. Including eating the food

This.
using. Every.single.thing.

Your Mum, or your GrandDad’s estate, is making payments under the lease because she expects the lease to have net value. It’s a choice.

Making the payments is the cost of keeping the lease. She expects to receive more than that on sale. It’s a financial decision.

I’d be wary of subletting, not because of the marginal rate tax but because security of tenure is being discussed politically. You could lose the entire flat in exchange for a continually devaluing rental stream together with increasing maintenance costs.

Alternatively your Mum could surrender the lease. If she doesn’t surrender, she should expect to pay her side of the terms until she sells for the profit she expects on her small outlay.

Feckless? To give oneself a decent quality of life rather than leaving money to "the heirs" (entitled much). Do you also think people are feckless to pay carers in their declining years, or to chose to go into a care home?

My great aunt moved into a similar development for the last 7 years of her life - and she had a great time. She made friends (had become rather isolated in her old house), joined in the socials, ate better, no more worries about keeping the house in good shape or the garden tidy, kept herself warm rather than worrying about heating bills (because it was all included) and even as she got frailer she could still manage to get down to the restaurant and see people. Yes we inherited less but so what? It was her money and her quality of life.

So many older people have a poor quality of life so as not to eat up "the inheritance" . Seeing no one but the carers most days, with maybe a phonecalleach or two week or a weekly visit by their dutiful children who whine and bitch about the stress of elder care whilst carefully ensuring "their nest egg," isn't depreciated too much by their parent actually having proper care companionship and comfort.

that was the case with DF's apartment - fortunately I sold it really quickly.
There was also a % payable of the sale price to the managing agents, so check your contract. I think that fee was a bit more than the Estate Agency fee - and they'd been brilliant.

Also take care, some PPs have mentioned letting the property out - some contracts prohibit that, so do make sure you understand the agreement fully.

@blossomtoes I can do the maths! And you can write it as an example that works, and one that doesn’t.

Even in your “bad” example, the person who bought the flat initially had 10 years of (hypothetically) a secure home with no worry about maintenance. Possibly a social programme. A ready made community. Maybe a restaurant on site. A “hotel room” suite rentable for visiting family - the one on my road has this and I was really surprised at how cheap it was, definitely part of the sales technique, possibly a loss leader to hook you into all the negatives you list! That person then had none of the worries after: they’re dead! So - at a cost - it worked for them. It’s rubbish for the inheriting person, but it was their money and if it worked for them, it was a good choice. That’s not naïve, stupid and feckless.

But none of that was my question!

Your example is that the flat bought for £150K sells for £110K. So the next set of maths following your example is less of an overall loss. There is surely a point at which the money lost is worth it, for all the positives I mentioned above. Especially as the money isn’t lost to a dead person, they’re dead! And that point becomes the re-sale price.

That’s my question - not, why are they hard to sell, but are they hard to sell if you will sell at a true market value?

Maybe there isn’t a sweet spot. That’s what I’m interested in. But even if you hit a point of you lose all equity, do you might as well be renting - can you consider the purchase of the lease as buying security of tenure?

I’m not trying to argue that I like the business model, I’m just interested in whether they are fundamentally un-sellable, or whether people just haven’t adjusted to an entirely different type of property ownership and therefore adjusted market value.

If the whole business model collapses, it’ll be interesting to see if Housing Associations sweep in and buy out complexes for social housing for the elderly!

Say I sold my house for £300k and bought one of these flats for £150k. The service charges are £5k a year so if I live in it for ten years it’s cost £200k.

The services are based on costs - the OP mentions this flat includes utilities; would you get these for free if you stayed in your house?

My father was concerned about the cost of services charges, and how long he'd be able to pay them; it was about 25 years from savings alone, so no real worries.
I also worked out the cost of outgoings - gardening, maintenance, additional heating, buildings insurance.. the service charges were pretty much on a par, + the apartment had a house warden in the day time.

I don't get how they're so popular new, either. The ones on the complex I mentioned earlier are up for resale at less than half the cost of new. And have been for at least a couple of years without moving. Yet the new ones in the newly built block next door are being snapped up.

I honestly can't get my head round it. I can only think that the whole new sales experience and pitch must be incredibly clever.

Sounds utterly crap but I guess it really depends on what T&C's are in the contract. Hope for a sale.

You're not missing anything, but the beneficiary of the estate is seeing it as their money. It of course isn't until all liabilities are discharged and then what is left is their money. Liabilities include the service fees until the flat is sold.

We had a similar situation a few years ago.My Mum lived in an extra care/ sheltered housing complex which was fantastic, and she had 7 happy years there.She rented though so it was easier.
She died on the Sunday and we had to empty the 2 bed apartment within 6 days.It did seem heartless at the time, but we managed to do it during the worst week of our lives.
We could have had extra time but it would have been at full cost.
My sympathies, I hope you can sell the flat soon💐

I’ve just looked at the McCarthy Stone in my village. I remember the building work having to stop during first Covid lockdown - so that’s how new they are. 49 units. 48 marked as sold as 1 available to rent (1 bed at £1700 a month! Not London). They were £250K-£300K.

I think people are beguiled by sparkling new kitchens and bathrooms and show flats with beautiful soft furnishings, those things blind them to the financial reality. The “second hand” properties are probably showing their age and need money spent on them so don’t have the appeal of the newly built. And obviously there’s a much harder sell for the new ones.

I’m really hoping there will soon be a high profile expose (imagine the accent on the final E) of this scam. It’s no coincidence that the companies benefiting are the same ones that made a fortune from PFI. It’s exactly the same model.

Imagine if you were buying a normal property and there was a guaranteed 50% fall in value the moment you moved your furniture in. You wouldn’t go anywhere near it, would you?

It seems to have come down to it being a scam because the care needs for the elderly are expensive and this depreciates assets that people are entitled to inherit.
Every issue is about how much assets are depreciating, not about how much the person got from being in a community, having their day to day needs met as they got frail and vulnerable. Families obviously couldn't provide this and ability to cope in old age is a real worry for some and a nursing home is dreaded by most. So they use their assets to give them peace of mind and care in their old age. This is expensive and means there is less to divide up when they die.
Nobody is being scammed. But there will be less to share out at the funeral, unfortunately.

@BIossomtoes I might if I had the money and fancied everything new. Why not? It's not as though you can take it with you.

“Imagine if you were buying a normal property and there was a guaranteed 50% fall in value the moment you moved your furniture in. You wouldn’t go anywhere near it, would you?”

Where are you getting your 50% from?

I’m going to mention again the market for brand new cars. Because an instant deterioration in value is acceptable to those consumers.

Which actually is an idea we can extend when you consider lease cars. I’ve just googled and found a figure in 2023 of 20-30% of new car sales being leases. To me, a leased car is a complete waste of money. But plenty of people love it - and their reasons are valid. It’s a different model of ownership.

That’s what I think these retirement flats are - a completely different model of ownership. Not a scam.

@BIossomtoes “I’m really hoping there will soon be a high profile expose (imagine the accent on the final E) of this scam”

If you’re on an iphone, hold down e and you can select é.
If on a Windows keyboard, Alt+e will give you é.

The value of the asset isn't any concern for the elderly person getting the support and care needs, is it. It's only a concern for those likely to inherit it. They elderly person is not going to be trading up or moving on anywhere but to a grave or nursing home. Both will take control of their asset and make no difference to their life if it has depreciated by 50 percent.
That's the nub. It's a decision that only benefits the elderly person and because it depreciates the assets, as all care costs do, it's being labelled a scam.
Until we are there, we don't know what value we would put on having a community with in built care needs when we are old. Elderly isolation and loneliness is a big thing, along with fear about being able to cope. This is meeting these needs. Something family used to traditionally do, but for whatever reasons, doesn't regularly do now.

And the value of the house is only what someone is prepared to pay. So if someone things a brand new house designed for elderly people, which they are, is worth 300k to them and they have the money, then good for them. Don't underestimate how difficult to use a normal house design becomes as you age. Stairs, showers, low down sockets, storage at heights, etc etc. These are all designed out and elderly people see all those real challenges as being taken away. There might be a cost in the price, but they might think it is worth it to stay independent.

I’m quite curious about all this now 🤣, so was googling and I found the article @itsmyp4rty was posting about earlier, I was reading about a woman who had inherited a flat with a £50,000 mortgage still on it, she couldn't sell it, was struggling to pay the fees and if she auctioned it then they couldn't guarantee that it would sell for more than £40,000 which was the highest reserve they'd put on it - and wouldn't even cover what was due on the mortgage.

It’s here: https://amp.theguardian.com/money/2021/mar/28/i-cant-sell-mums-retirement-flat-and-the-charges-are-mounting-up

So the mother had lived there for 33 years! And the reason that there’s a mortgage still to pay is that mum had taken out an equity release loan. So kudos to mum really - she definitely made good choices for her, it seems!

It’s still an interesting article, especially giving insight that some of these homes really do become worthless after death. But it’s interesting to me that the headline “sob story” is actually for a deceased person who seems to have absolutely rocked at playing the stem in her favour!

Thanks @Testina.

I think there’s some confusion here in what the service charges cover. They don’t cover care and support, they’re comparable to the service charges on any other leasehold property., apart from a 24 hour emergency call system - which anyone can buy from an independent provider. These are McCarthy and Stone’s.

• If you live in a Retirement Living development your service charge includes:Paying for the House Manager – they ensure the development runs smoothly
• All maintenance of the building and grounds, including window cleaning, gardening and upkeep of the building exteriors and communal areas
• A 24-hour emergency call system
• Monitored fire alarms and door camera entry security systems
• Buildings insurance, water and sewerage rates
• Maintaining lifts
• Heating and lighting in communal areas.

Anyway, anyone who thinks that’s good value for the thick end of £80 a week is welcome to it. They won’t be seeing any of our money.

OP you say your Grandad was signing up for new windows etc so you had to get him out of his private accommodation, suggesting you thought his judgement was impaired (or did you think he was just making decisions you wouldn't have made?) yet you thought he was mentally capable of signing contracts for sale and purchase of leasehold property?
You are liable for service charges on an ordinary leasehold flat until it's sold, we don't hear so much about that because the fees are more modest. Posters up thread have explained why the fixed fees are not reduced even when the flat is unoccupied.
Some of the service charges on older peoples accommodation are eye watering, but whether they are good value is subjective. If it's important to you to live in a swish place, with nice gardens, posh communal lounges to meet friends, marble kitchen counters, activities coordinators to get people involved etc then it's worth it.
They don't include care or meals though.

@BIossomtoes I promise I don’t work for McCarthy Stone 🤣 but I disagree that the 24 hour emergency call is the only difference with a regular leasehold property.

One big difference is the house manager. If you are 80 and your lightbulb goes, the longest you’ll wait to get it sorted is until they’re next on shift (Mon-Fri 9-5). Don’t under estimate how many older people don’t have friendly neighbours or nearby (or bothered) family. But just having someone who knows you, that you can speak to most days, is a big plus for some people. Part of their role is to develop the community. To me, that’s what you’re paying for - the corridor lighting is the extra!

The food isn’t free, but being able to just take a working lift downstairs and get a meal prepared for you - can be great. My 90yo MIL - in her own home - gets Wiltshire Farm Foods frozen means delivered. She’s really frail and my husband worries about her dropping hot food on herself getting it out of the oven - she’s really short, it’s in a tower unit.

Cleaning and laundry - yes, you pay extra if you want that. But, the ease of just saying to the house manager, “where do I sign?” You see all the time posts on here about how hard it is to get a cleaner, or “should I sack my cleaner because I pay for 2 hours and they’ve only done 1 but oh it’s so awkward and I can’t do confrontation.” And that’s before you get into the worry about finding them (and refinding when they quit or are bad) or security of people in your home.
You are paying for the ease of knowing you just have to ask (and pay) and it’s sorted. Don’t think she dusted properly? No awkward confrontation - tell the house manager.

For the social side… I think it’s like NCT! Nobody pays for NCT classes to learn about contractions. They join cos they’re hoping to make like minded social connections.

All of that is why people will pay £300K (and let’s face it: for some it’s so that those social connections are with “my kind of people” - who also have £300K) for these places.

If anyone’s child is surprised at ongoing fees after death, then frankly they should have been more interested in their parent when alive.

Reading around it today, it does sound like Covid had a big impact on sales so I’m sure that for some people it hasn’t paid off.

But we have an ageing population. I bet some people will make plenty of money from these, and don’t be complaining then.

I believe that nothing is a scam if a person has both the information and a choice.