Big win for older people as government commits to protection from hidden fees in retirement housing

Housing Minister says government “firmly committed” to reform “as a priority” and says she wants regulation “next week"

Housing Minister says government “firmly committed” to reform “as a priority” and says she wants regulation “next week”

Also reassures residents of Integrated Retirement Communities that Commonhold tenure will not be imposed on sector

Housing Minister Rachel Maclean MP has committed the government to finally protecting older people from hidden event fees in retirement housing.

Speaking to the ARCO annual conference for operators and residents of Integrated Retirement Communities, she undertook to bring the rest of the retirement housing sector into line with ARCO members by introducing mandatory disclosure of event fees.

This change was first proposed by the Law Commission following a review in 2017. The government accepted the recommendations in 2019, but has done nothing since.

The Minister said:

“You have just heard [Older People’s Housing Task Force Chair Julienne Meyer] make a case for one of the options they are considering – reform of retirement property charges called event fees.

While some time has passed since the Government accepted the majority of the Law Commission’s recommendations on reforming these fees, we haven’t been idle in supporting leaseholders…

… We [remain] firmly committed to reforming event fees, as a priority.”

In response to a question from the conference audience about when statutory regulation of event fees in the retirement housing sector could be expected, the Minister said:

“I would like it to come next week if I had my way… We are committed to doing it.”

The Minister’s statement followed an earlier intervention by Professor Julienne Meyer, Chair of the Older People’s Housing Task Force, who provided an exclusive preview of the Task Force’s recommendations to government, including:

“We recommend that the government implements measures to protect consumers from hidden event fees, as soon as possible, based on recommendations developed by the Law Commission in 2017, and accepted by government in 2019.”

ARCO has long called on the government to introduce statutory regulation equivalent to the Code that its members abide by, including full disclosure of event fees.

Michael Voges, Chief Executive, ARCO:

“This is a big win for older people and for ARCO members who have long committed to the highest levels of transparency as part of the ARCO Consumer Code.

Retirement housing horror stories about hidden event fees inevitably deter families from looking at the options available, and have resulted in many thousands of older people in late old age experiencing unnecessary loneliness, ill-health and loss of independence.

It’s fantastic that the Older People’s Housing Task Force is already having an impact, and the government has committed to closing the gap in regulation that enables hidden event fees in retirement housing.”

Separately, the Minister set out the government’s position on the Integrated Retirement Community and Commonhold as a tenure, which the government is seeking to reinvigorate in order to empower residents of mainstream housing flats and apartments in how they are run.

Asked by one resident of an Integrated Retirement Community whether she could assure older people that the government will not impose Commonhold on the sector, the Minister responded:

“The short answer is yes, I can give you that assurance, we will not be imposing Commonhold on your sector or any others… We have worked on a broad package of leasehold reforms which we are committed to. None of our reforms will go as far as imposing Commonhold. It is not a one-size fits all solution.”

Many older people who move into Integrated Retirement Communities welcome the transfer of responsibility for repairs, investment and risk to the scheme operators and there had been nervousness among some residents that the government’s plans for Commonhold would disrupt current schemes.

The Minister also talked about the benefits of Integrated Retirement Communities, calling out one of ARCO’s members, the ExtraCare Charitable Trust, in particular:

“Specialist retirement housing can play a hugely valuable role in helping people to remain living independently for longer; feel healthier, and ultimately to feel more connected to their communities.

A great example is the ExtraCare Charitable Trust’s Shenley Wood retirement village, where 300 homes are available for purchase, shared ownership and rent.

Its fantastic array of facilities, clubs, and social opportunities support independent living while allowing individuals to pick up old pastimes and try new hobbies surrounded by neighbours-turned friends.”

NOTES TO EDITORS:

‘Event fees’ contribute to the cost of things like maintaining communal facilities and are typically charged by the operators of retirement housing schemes to homeowners when their properties are sold on. The concept of event fees originated in Australia and New Zealand and are used as standard in these countries. A typical event fee might see nothing to pay until a property is sold, with the event fee charged as 4% of the sale price per annum, capped at 5 years (maximum 20%).

ARCO members using event fees are governed by the ARCO Consumer Code. However, event fees are also used by non-ARCO members in other parts of the retirement housing industry without being subject to any kind of regulation.

In 2017, the Law Commission published its report - Event Fees in Retirement Properties – which called for standardised, transparent information to be provided at an early stage in the purchase process, including how much the fee is likely to be, who gets it, and what the home owner will receive in exchange.

The Government sent a final response to the Law Commission’s recommendations on event fees in retirement properties in March 2019. The then Minister for Housing and Homelessness, Heather Wheeler MP, said that the Department would “implement the report’s recommendations” – see here for more info.

Launched in 2015 and revised in 2017, the ARCO Consumer Code is continuously reviewed to ensure that it provides the benchmark for good practice within the Integrated Retirement Community sector.

The Code applies to Integrated Retirement Communities in the UK that have been registered with ARCO by ARCO Approved Operators, as well as Provisional and Prospective members of ARCO.

The Consumer Code builds upon UK consumer law to set specific, high standards for the Integrated Retirement Community sector. It is informed by regular assessments of ARCO members and by external developments, such as the Law Commission for England and Wales’ work on event fees in retirement properties.

Integrated Retirement Communities (IRCs), sometimes known as ‘housing-with-care’ sit between mainstream housing and residential care. The key features of an Integrated Retirement Community are:

Every resident has their own front door, kitchen and bathroom
24/7 onsite support
Extensive shared facilities - frequently including lounges, restaurants, gyms, hairdressers, shops and other leisure facilities
Optional, onsite care and support services are designed to support older people to live independently for as long as possible.