OFT Issues Formal Noticies to Retirement Home Companies that Charge 'Exit' Fees

Retirement home companies that charge controversial lease transfer charges and other so-called exit fees are being told by the Office of Fair Trading (OFT) to justify the charges. The 26 companies will have 14 days to respond. The OFT is concerned that 'exit charges' may constitute an unfair contract, and that elderly people in leasehold retirement homes are particularly vulnerable.

The OFT has also invited comments from all interested groups and individuals, so this is an opportunity for any retired leaseholder to make their views known.

For more details, see OFT Press Release

Posted 17/09/09

Retirement home companies accused of overcharging service charges
Residents of retirement homes are urged to fight against excessive charges.
Timesonline 26.09.09

Channel Four News story on retirement home exploitation

This story includes a section on Lease Transfer Charges in homes owned by Tchenguiz/Consensus
C4 News 1.09.09

McCarthy and Stone's Ending of Lease Transfer Charges Applies to Existing and New Leases (but only while it remains the landlord)

In a letter to the FPRA, the Office of Fair Trading (OFT) clarified that McCarthy and Stone's undertaking to remove from its leases a 1% transfer fee applies to both new and existing leases.

However, the undertaking only applies while McCarthy and Stone remain the freehold company. The obvious flaw in this arrangement is that If the freehold passes to another company, then the undertaking no longer applies. The OFT says it is looking into this matter.

The undertaking not to charge a lease transfer fee does not apply to any other companies, such as Peverel, who also rely on similar terms in their leases.

The legality or otherwise of the fee can only be tested by the courts, and until that happens the current situation will continue.

Posted 18/08/09

Further reading:

SAGA Magazine, December 2009
CARL Newsletters 26 and 27
Letter from reader 'sharpdonald' in Guardian Money
Campaign Against Retirement and Leasehold Exploitation (CARLEX)

Unfair Lease Transfer Fees: do they apply to existing leases?

Our recent report (below) on the Office of Fair Trading's success in removing lease transfer fees on retirement homes, prompted FPRA members to report that this only applies to new leases. The FPRA is now seeking clarification from the OFT on whether transfer fees on existing leases are considered fair.

Retirement Housing Company Agrees to Remove Lease Transfer Fee after OFT Intervention
The Office of Fair Trading has secured the agreement of a major builder of UK retirement flats to remove from its leases a 1% transfer fee when the property is sold. This is expected to help thousands of elderly residents selling their homes.
See OFT press release

Posted 14/01/2009