There are a number of additional costs that your relative will need to factor into their budget for sheltered housing. These are on top of the mortgage or rent – and can be costly, when added up.

On this page you can find information about the different potential costs that may come with sheltered housing:

1. Ground rent
2. Service charges
3. Reserve fund/sinking fund
4. Transfer fees
5. Permission fees
6. Bills

Ground rent 

Leaseholders usually have to pay ground rent to the freeholder. This is an annual charge to essentially ‘rent’ the space in their building, in the case of a block of flats, or the land, in the case of a bungalow. Details of the ground rent should be written into the lease. It’s a good idea to check the terms for reviewing and increasing the ground rent.

Service charges

It is normal to pay a service charge on any leasehold flat to pay for things like maintaining communal areas and buildings insurance. The management organisation will also charge for providing their management services. However, because sheltered housing includes specialist services, such as a scheme manager, a 24-hour alarm system and laundry, service charges are likely to be higher than in a regular flat.

  • Service charges might be charged monthly, quarterly or annually.
  • Charges vary depending on the type of property and services included, but they could be anything from £100 to £300, or even in excess of £500 per month for a luxury property. 
  • Residents are entitled to see a breakdown of what the service charge covers. They are also entitled to challenge any charges that they feel are unfair.

Be warned that fees like the service charge are ongoing, regardless of whether the property is occupied. So if your relative had to move into alternative accommodation or was in hospital for a long period, for example, charges would still apply.

Reserve fund/sinking fund

This is a fund to cover any unexpected or future maintenance or work on the property - a new roof, lift repairs or external decoration, for example. Some agents will take money for this out of the service charge; others might charge separately. It might be written into the lease that managing agents can ask for a one-off payment for the sinking fund when you sell the property.

Transfer fees

Some managing agents charge a fee when you sell your retirement property or if the main occupant of your home changes; if you sublet the property or another person moves in, for example. These fees can vary hugely – from around 1% to 30% of the sale price, although the majority are only 1 or 2%.

Other fees

There are other fees to watch out for. These should be detailed in the lease or tenancy agreement, so make sure that you go through this with a fine-tooth comb and seek legal advice if necessary.

Transfer fees – also called event fees, exit fees and deferred management charges – are often used by retirement housing operators to ensure a constant income, which may then be reinvested back into maintaining and improving the development.

The higher charges of 10, 20 or even 30% are generally associated with extra care housing where a wider range of additional services are available onsite. By agreeing to this transfer fee the resident may, in return, be able to fix the amount of service charge they pay, have the cost of meals in the restaurant subsidised, or pay a reduced amount for any future care that they require. In short, transfer fees can sometimes be used to afford a lifestyle that may otherwise be out of reach.

At the time of writing, the Law Commission are due to announce their recommendations for any reform to the law that they consider to be necessary to ensure that there is greater transparency where a transfer fee is payable upon the sale of a retirement property, and under which circumstances it is reasonable for such a fee to be requested.

Permission fees

A permission (or administration) fee may be payable if you want to make any changes to the property. This might be structural work or, in some cases, simply swapping a bath for a shower. Fees can be around £40–£50.


When working out the cost of sheltered housing, don’t forget that residents are responsible for bills for their own properties, such as:

  • telephone
  • internet
  • electricity and gas for their own flat
  • water
  • contents insurance
  • council tax (unless receiving benefit)
  • TV Licence if you are under the age of 75 (however, sheltered housing residents may qualify for a reduced licence fee of £7.50, speak to the managing agents for more information)
  • Help with housework, such as gardening and cleaning.

Find out what these costs are likely to be so that you can factor them into the budget.

More information

Page last reviewed: July 2016
Next review due: February 2018