Retirement village life: your own Thursday Murder Club? - Financial Times

The Thursday Murder Club books may have been a huge financial success for their author, the television presenter Richard Osman, but I suspect they have also helped the performance of the retirement village industry.

In the books, a group of ageing residents at the luxurious Coopers Chase Retirement Village meet every week to tackle unsolved murders. The geriatric famous four — formerly a nurse, a psychiatrist, a secret service operative and a trade union leader — find plenty of adventure together, not to mention the occasional murder victim on the premises.

Blood on the carpet might seem like poor PR for the industry, but the books help explain why a growing number of my clients are moving into these complexes — with the attractions of care, luxury comfort and, above all, companionship.

These properties are not cheap. You can easily pay close to £1mn for a two-bedroom apartment, and in central London I have seen some go for £3mn.

The people who can afford to live there are often successful professionals with lots of interests and are themselves good company. Many have traded down from a large family home, enabling them to give money to younger generations as part of their estate planning or to release capital to live on.

There are many perks to this way of living. Without any grounds to maintain and with people and staff around to keep an eye on your property, you can lock the door and head off for a world cruise or a three-month holiday without any worry about the lawn becoming a jungle.

One of my clients has a terminal condition. Moving to a single-storey apartment made perfect sense for him and his wife. He knows that his wife will make friends quickly there and have a community around her when he passes away — and that she will be somewhere safe if she is a widow for, say, 25 years.

It is comforting for their adult children, too. The fact that there are maintenance people on site to deal with things like leaky taps means their visits can focus on quality time with mum rather than going through a job list. The village also has a guest suite for visiting relatives to stay in — albeit at a cost.

The facilities are the main attraction for other buyers. Some places have a club with a swimming pool, gym, tennis courts, spa, bar and a restaurant that serves meals from breakfast to supper time. You do not have to cook, and you do not even have to shop if you cannot or do not want to. These facilities are a good place to congregate to make friends.

Of course, all these luxuries come at a cost — and not just the property purchase price. It is important to know what you are signing up for. There are downsides that might take you or your loved ones by surprise later if not budgeted for or anticipated.

Most retirement villages charge a monthly service fee. This covers external maintenance of the home, the grounds and the facilities, as well as club membership. We have analysed the charges at each property of one of the biggest operators. For a two-bedroom property, the monthly fee ranges from nearly £500 to over £1,000, rising in line with RPI inflation each year.

There is often an annual car parking fee — up to £2,024 (though often nothing) — and some properties charge ground rent of up to £500 a year.

Many retirement villages will provide a care package, with homecare and welfare visits charged in line with the fees you would expect from a high-quality provider elsewhere. This may suffice, but if you were to need serious care you may still have to move into a specialist care home.

Be aware that you are likely to be asked to pay the membership fees even if you become bed-bound and cannot use the facilities or move into a care home but keep your property. Once you die, your loved ones are obliged to pay the fees until the property is sold.

Perhaps the most contentious charges relate to what happens when you die or want to leave. A lot of these villages insist on what they call a "deferred management charge" and an exit fee. This is payable on the sale of your home or a change of occupier.

The operators argue that this fee helps keep the monthly fees lower. Many of these villages are built around grand historic buildings, which can be expensive to maintain. A company used by one of my clients typically charges 1 per cent of the sale price for up to a maximum of 15 years of you living there — in other words, up to 15 per cent of the sale price.

I have seen places that charge even more. One operator in central London charges 4 per cent a year up to a maximum of 28 per cent. So that is £840,000 on a £3mn home after seven years of living there. (And this is in addition to a £1,485pcm "membership fee" and £3,750 pa parking — £21,570 a year of ongoing charges.)

Expect a sales administration fee too. Typically this might be 1 per cent of the sale price or market valuation. A 2 per cent sales agency fee may be applied — plus VAT — if the operator markets the property.

Richard Osman's efforts notwithstanding, the secondary market for these properties is reduced — usually you have to be at least 55 and sometimes 65 to buy them. That means the resale value may prove disappointing.

Often these sites are developed over time. The earlier units may become harder to sell as newer ones come on stream. If you are buying, ask to see the development plans. Will your village soon begin to feel like a busy town? Will the facilities become so crowded that you cannot swim more than two strokes in the pool without hitting someone? Will that nice field where you walk the dog — assuming you are allowed one — soon be a building site?

When buying, consider instructing your own solicitor — to avoid conflicts of interest, like highlighting all the potential costs. Operators may suggest in-house solicitors with the lure of discounted fees. I have come across examples where operators will offer to sell your house for you so you can move in straight away — but for 10 per cent of the proceeds.

Reputable operators are likely to be members of the trade body, Associated Retirement Community Operators (Arco). This should give you confidence in their integrity — but the sales teams are still there to sell, and you may be at a vulnerable point when you are making the decision to purchase a home. If you can, you may want to engage your family in the decision. The most crucial thing to remember is that this is not an investment but a lifestyle choice. And for many it is a good choice.

My clients have gone into this with open eyes. They understand the costs and so do their families. Most have been very happy with their decision. None has yet taken to sleuthing or found a murder victim on the premises. Or, at least, not one they have told me about.

Charles Calkin is a senior financial planner at wealth manager James Hambro & Partners