How do I buy sheltered housing?
You can buy a sheltered housing property as you would a normal leasehold property.
- HousingCare lists sheltered and retirement housing available to buy across the UK.
- Many are advertised with local estate agents, as well as on property websites, such as Rightmove.
Just over 20% of retirement homes are bought, most of which are sold on a leasehold basis, which means the property is sold with a long lease (usually around 125 years). Another person – the freeholder – owns the actual building and is responsible for the structure, exterior and communal areas.
Some areas have shared ownership schemes (also known as leasehold schemes for the elderly) to help people to buy who can’t afford the full market price of a sheltered housing property. Residents buy a share of the equity of the property and pay rent on the remainder.
Buying sheltered housing in Scotland
Housing legislation in Scotland is different both for buying and renting properties. In addition, most private retirement housing developments are managed by a management company or ‘property factor’, who will set and collect service charges. Download Age Scotland’s factsheet on buying retirement housing to find out more.
- Management company: the communal areas, services and facilities of sheltered housing are usually run by a management company. This might be a private company, council or housing association.
- Residents’ Association: some leasehold properties have residents’ associations that work with the management company to ensure residents’ views and needs are considered and addressed, where possible. This gives leaseholders a chance for their voices to be heard and their opinions to be taken into account. The Leasehold Advisory Service (LEASE) can give more advice on this.
What legal matters should I consider?
There are a number of legal rights and codes in place designed to protect you when purchasing a leasehold property.
Leaseholder legal rights
Leaseholders have legal rights in relation to their properties different from those of freeholders. In a nutshell, they have the right to:
- require information, for example about service charge income and expenditure
- challenge service charges or other management arrangements
- take over the management themselves
- acquire the freehold of the building.
The Leasehold Advisory Service (LEASE), a government-funded organisation that provides independent advice on leaseholds. gives free information and advice to leaseholders in England, Northern Ireland and Wales, and its website has a section dedicated to retirement housing issues. If you want to enforce any of these rights, it’s a good idea to seek advice from LEASE and possibly a solicitor, too.
National House Building Council (NHBC) Code of Practice
Look out for properties that have been built by NHBC-registered developers, as this gives additional protection. All retirement housing built after 1 April 1990 is subject to the NHBC Sheltered Housing Code of Practice, which stipulates that there must be a legally binding agreement between the developer and the management organisation to protect residents’ rights.
The Association of Retirement Housing Managers (ARHM) Code of Practice
The ARHM Code of Practice regulates managing agents who manage leasehold retirement housing. Management organisations that are members of the ARHM are bound by the code.
The Associated Retirement Community Operators (ARCO) Code of Practice
ARCO represents many of the extra care housing operators in the UK. While it isn’t mandatory for extra care developers to register with ARCO, those that do become members agree to follow the ARCO code of practice, which aims to enable consumers to make informed choices about their housing options.
What else should I think about before buying?
Make sure you pay close attention to the finer details before going ahead with your purchase.
Read the lease
Before making any decisions, get hold of a copy of the lease. This is the most important document to a potential buyer, as it details the legally binding terms of the agreement between the leaseholder and the management company. It’s worth paying a solicitor to check the lease – they can explain any clauses you don’t understand, and should be able to spot anything out of the ordinary.
The most common charges will be ground rent and a service charge. Leaseholders usually pay an annual ground rent to the freeholder for the space their property occupies. They will also pay a service charge – either monthly, quarterly or annually – to cover things such as maintenance, repairs and buildings insurance.
Check how often the ground rent is reviewed and on what basis it can be increased. Be aware, too, that some retirement housing leases have unusual clauses, so check the contract and ask for an explanation for anything you do not understand.
There may also be additional costs, such as transfer fees and permission fees to consider.
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