The Property Ombudsman (TPO) has revealed how it has been working with the Law Commission to produce a report that heavily criticises retirement property landlords for charging hidden leasehold fees when properties are sold or sub-let.
The fees involved as called ‘event fees’ and over costs “buried deep” in leaseholds and then charged when there is a Transfer of Title or Change of Occupancy – and even when a spouse or carer moves into a property.
Agents are also highlighted in the investigation, which has been conducted over two years and shines a light on how many retirement properties are sold. It has now been presented to parliament and the Law Commission says it is now awaiting a response from the government.
TPO backs the Law Commission’s stance that the fees help offset the often substantial cost of the extra on-site healthcare services many retirement home developments offer, but criticises many landlords – and agents – for not highlighting the fees at the point of sale.
“Owners are not always being told about the charges, which can be up to 30% of the property price,” the Law Commission says.
“Others may be hit by huge bills for changes to occupancy, even when a carer moves in to look after the owner or where they have to move into a nursing home and sub-let their property to cover costs.”
In the report the Law Commission says that agents should already be aware of the problem of ‘transfer fees’ because the “code of practice for residential estate agents has recently been updated to deal with event fees,” it says.
“We recommend that the code of practice for residential estate agents should be updated again to include reference to checking the central database for the disclosure document.”
“We will work with TPO to achieve this. We will also work with TPO to provide guidance to estate agents and to raise awareness of the new code provisions among members of all redress schemes.”
The Law Commission says it now urges the Government to regulate the sector through amendments to the Consumer Protection Act 2015 and bring in a new code of practice to make these fees more transparent, stop unexpected fees and allow a right to challenge unfair fees.
It also says that an online database for estate agents and consumers should be set up “to ensure that event fee information is included in all advertisements”, it says.
The report was compiled with other organisations including NAEA Propertymark and RICS.
Read the full report.