My Lords, I am bored of my own voice, too, so bear with me. It is just that I think that this is an important issue. Through this amendment, I am asking the Government to bring out a review of the specific leasehold property market for pensioners and the elderly, which I would have thought would be of particular interest to all of us in this House who might be looking in that market area.
To be serious about it, I became interested in the issue after watching a “Pensioners Against Leasehold” video, one excellent example in a series of investigative campaign films produced by Free Leaseholders. Jane, who presented the video, made me realise that leasehold is especially devastating for those selling their family home and downsizing into a flat then realising that, rather than doing the sensible thing, they have potentially
bought into a debt trap. I have just been talking about first-time buyers, and I am now talking about buyers who are very experienced home owners but who are buying into a new type of home. For example, there is Nick from Bournemouth, who is in the film, who bought into a retirement block of 61 flats and who described having a toxic relationship with management agents.
The other reason why I raised this was that the mother of a friend of mine made that big decision to move later in life and into an Anchor property—and Anchor’s motto is “later life is for living”. All I can say is, “If only”. Having made that big decision to move into a special category of living accommodation and selling up her house, she is faced suddenly with huge service charges and the burden of worry. One resident facing all this said, “We just feel as though they’re waiting for us to die, because we’ve become a nuisance”. Somebody else made the point, “The whole point of selling up and moving into this retirement home was because I didn’t want the burden of worrying about things—and now we spend all of our time checking on our management committee, because they keep ripping us off”. So I think there is something going on.
Retirement properties in Britain are typically made up of individual flats with communal areas and access to emergency health support. They are almost always sold as leaseholds by builders, who then sell the freehold to a management company. Those companies are entitled to charge leaseholders fees for upkeep along with ground rent. They are a novel form of tenure, which I am quite enthusiastic about in some ways, but the system is open to misuse—and, over recent years, there have been a number of scandals, suggesting that we need a close look at this sector. It is taken as a given that retirement homes should be granted exemptions from leasehold reforms in a lot of the discussions, but actually a lot of the problems in this sector are created in exactly the same way as leasehold creates problems.
Newspapers have been full of tales of exploitation of those buying retirement homes. They are sometimes seen as easy targets, perhaps because they are older and suffering bereavement or illness. They certainly see these homes as appropriate for the latter part of their life, and we would be scandalised in any other circumstances if older people were being exploited.
7.30 pm
It is shocking to hear of some of the scandals. Exploitative service charges and ground rents feel that much worse when they are imposed on the elderly. Families have reported that their elderly relatives have been persuaded to use solicitors proposed by a housebuilder, rather than an independent one, to advise them on a purchase. There are stories, for example, of a retirement home bought for £197,000 in 2009 from a FTSE 250 company being sold for £26,000 six years later; by the time the flat owner died, she was paying the management company almost £8,000 per year in service fees. There are residents who need to borrow against their new homes to fund further care only to discover that no bank will assist them because their asset is so depleted in value. There is even the story of a resident who was told that she had to pay £300 to
put up a satellite dish, in addition to a £95 annual maintenance fee, even though Sky installs the dishes free of charge. We have disdain for the kind of people who knock on elderly people’s doors and rip them off, but this is happening in the housing sector and needs to be looked at.
Such stories are giving the sector a bad name, but it is worth noting that Michael Voges, the chief executive of the Associated Retirement Community Operators, rebutted his own members’ criticism of the media for reporting these scandals, saying:
“Unfortunately, these stories are largely true”.
The situation was summed up in the Times in an editorial in 2019.
“If the measure of a civilised society is the way it treats its vulnerable citizens then our investigation into the experiences of elderly people when they purchase retirement homes from certain developers paints a depressing picture of modern Britain”.
The Times notes that this is not just a rebuke of bad practice by bad apples and so on. It suggests that the Government need to intervene to regulate. My amendment suggests that we do not leave investigations up to the media, but that we actually commission a detailed analysis and, rather than simply revealing scandals, we look at the systemic problems associated with leasehold and this specific part of the housing sector.
The Government are already involved in one way, because the noble Lord, Lord Best, has done invaluable work in the past drawing attention to the problem of retirement homes sold as shared ownership—specifically, how private sector developers have received billions in taxpayer grants via Homes England towards the cost of building new retirement flats. There have been some egregious abuses in terms of blocking staircasing and so on.
I assume that the Government, like many of us, are broadly enthusiastic about specifically built retirement homes. These retirement homes, on paper at least, are an ideal situation to downsizing, allowing valuable housing stock to be freed up for new generations, and to allow people as they get older to have access to a new community and support, while retaining independence and autonomy. At present, including social housing, the retirement sector is around 300,000 units.
As far as I can tell, everyone wants the sector to expand, because living in retirement housing is potentially an excellent option for many older people. That is why tackling problems should be a priority for us. We know there is a problem, as only 2% of the over 65s live in designated retirement properties in the UK, compared with 12% in the US and in Australasia. This figure was noted in an article in This is Money titled “Retirement home scandal that wipes out life savings”—surely a clue as to the barrier to the growth of the sector. Indeed, as ARCO concluded:
“Reputationally, our members recognise that this sector can never grow if we can’t offer the customer a product that they can really trust”.
A YouGov poll recently revealed that one of the main impediments for the elderly in terms of buying designated retirement housing is a lack of control over ongoing costs, such as uncapped service charges, and a fear of sudden unavoidable capital expenditure
demands—such as our old friend major works, which I mentioned earlier, recouped from leaseholders. Michael Voges from ARCO explained:
“They want control over these costs, that they are not going to be hit by things like expensive new electronic phones, new roof or whatever. … people do not want to take on that risk … the leasehold system does not provide what older people really want, which is control over ongoing costs”.
I think an increasingly important barrier is the fear of causing problems in the future for their families too. Bear in mind that many choose retirement homes precisely because they do not want to be a burden on their offspring. How depressing if that very decision causes problems for their children after their death. One son dealt with his father’s flat, which was bought for £163,000 in 2007. He started trying to sell it in 2015 after his dad died, and it took five years to sell. Buyers were put off by the extortionate and rising service charges and it eventually sold for only £30,000. What is more, during those frustrating five years, the son had to pay the climbing service fees of £560 a month, while still paying his own mortgage. He commented bitterly about the irony of his father putting his life savings into a retirement home, only for it to become a huge financial millstone around his son’s neck.
I want to note that I do not want to be prescriptive about the conclusion of the review in this amendment. I am happy to see what we come up with, and there are lots of positive ideas flowing from the sector itself. There are solutions to this. The LKP and betterretirementhousing.com have been campaigning for an improved retirement housing sector since 2012. The Associated Retirement Community Operators is also brimming full of innovative solutions. That is what this review should look at, rather than just the problems. I think that we can find a way of solving this. I like the intergenerational idea of students living with older people; I like many of the suggestions. I certainly think that we should look at a particular piece of legislation on this. Whichever way we go, there are lots of ideas.
This review will be a good positive start to identifying both the problems and how to resolve them. The main thing is that older people are being ripped off, and we are not able to develop a potentially lucrative housing sector because of our friend leasehold once more. Let us sort it out, do a review and see if we can come up with something better.