Retirement Village Mortgages With Substantial Fees Over 55s

Event fees (sometimes called deferred management fees, transfer fees, or assignment fees) are charges payable on specific events, most commonly the eventual sale of the property. The fee is typically calculated as a percentage of the sale price, ranging from a few percent to substantial amounts (15 to 30 percent in some schemes). The percentage may increase with length of occupation in some structures, decrease in others, or remain flat. The detail varies considerably between schemes and lease versions.

The financial impact of event fees on long-term value is significant. A 20 percent event fee on a £400,000 retirement property eventually sold would mean £80,000 paid to the operator on sale, with the remaining £320,000 going to the seller (or the seller’s estate). For customers planning to live in the property for many years, the event fee may be a reasonable trade-off for the services and community provided. For shorter occupations, the event fee can substantially reduce the financial outcome.

The Law Commission and consumer organisations have raised concerns about specific event fee structures in some schemes. The Mortgage Lenders’ Trade Body has issued guidance on event fee assessment, and lenders typically apply specific underwriting to high-event-fee properties. The lender pool for properties with substantial event fees is narrower than for standard retirement properties.

Service charges in retirement villages cover the communal facilities and services, which can be extensive. Premium retirement developments often include restaurant facilities, fitness suites, swimming pools, on-site staff, scheduled activities, transport services, and various other amenities. Service charges reflecting these amenities can be substantial (potentially several thousand pounds annually). Affordability assessment by lenders factors these into the customer’s outgoings.

Continuing Care Retirement Communities (CCRCs) are a specific model where residents move through different levels of care as their needs change, from independent living through assisted living to nursing care. CCRCs typically charge a substantial entry fee plus ongoing fees, with the entry fee partially refundable on death or departure. Mortgage availability for CCRCs is highly specialist with a narrow lender pool.

For mortgage purposes, the specific fee structure of any particular development affects both the affordability assessment (current outgoings include the service charges) and the lender’s view of long-term value (event fees affect the residual value if the property is repossessed and sold). Mortgage applications for properties with substantial fees typically require specific evidence including the lease, the fee schedule, and historic fee data.

For equity release on properties with substantial fees, the lender pool tightens further. Lifetime mortgage providers typically prefer properties with predictable long-term value. Substantial event fees create uncertainty about future sale proceeds, which makes the property less attractive for lifetime mortgage purposes. A specialist subset of lifetime mortgage lenders considers these properties on case-by-case underwriting.

The Process

Your first conversation is a relaxed discussion about the specific development, the fee structure, and your circumstances. There is no cost or obligation.

We may ask for the lease, the fee schedule, the service charge accounts, and any historic information about fee increases. We research the specialist lender market and come back with a written recommendation.

Every retirement village case is different. A development with modest event fees and reasonable service charges is a different case from one with substantial multi-component fees, and our advice reflects those differences.