What are retirement villages?
Retirement villages (or retirement homes) are property developments built especially for older people. They provide high-quality homes for those who wish to live independently in a safe and comfortable environment. They usually offer a range of different accommodation types, including houses, bungalows and apartments, and are often located in attractive rural settings.
Most retirement villages promote a luxury lifestyle, offering a variety of leisure facilities, such as swimming pools, restaurants and bars, plus the opportunity to enjoy social activities within a community of people of a similar age.
While the number of people living in these types of developments is relatively low in the UK, the market is growing steadily and many more villages are expected to be built over the coming years.
Properties in retirement developments are often considerably more expensive than homes on the open market. Research by the real estate company Jones Lang LaSalle suggested that, on average, a retirement apartment in England cost around 17% more than a standard apartment of the same size in 2018.
Retirement villages or sheltered housing: what is the difference?
At a basic level, retirement villages and sheltered housing are similar. Both offer housing designed for older people who want to continue living independently. But there can be significant differences between these housing options.
Retirement villages offer premium facilities in an attractive environment and, as a consequence, are usually more expensive than other options. They are generally aimed at people who want to enjoy an independent lifestyle; they may not be suited to people who require a higher level of support or supervision. Although some developments do provide access to additional care and support – at an extra cost – so it’s worth investigating all the options within retirement villages.
Sheltered housing is often operated by local authorities, housing associations or charities, while retirement village properties must be bought or rented privately.
Do retirement villages offer care and support?
The majority of properties in retirement villages are designed for independent living, but some do provide care and support for those that need it. For example, some schemes include assisted living apartments. Others offer access to a dedicated domiciliary care service that can provide home help or personal care.
Most retirement villages provide facilities to promote general health and fitness, including gyms, exercise classes, massage and physiotherapy.
If you’re thinking about a retirement home, make sure that it offers the kinds of care and support you require, and think about future care needs if possible. If you’re moving into a scheme that offers a bespoke home care service, find out if you would be required to use the scheme’s own service should you need extra support in future – or if would you be able to choose an external care provider if you wish to?
The pros and cons of retirement villages
- Freedom The freedom to live independently in your own home.
- Facilities Most have excellent social and leisure facilities.
- Staying together The opportunity to stay with your partner, who may have different care needs.
- Making friends Opportunities to socialise with other residents of a similar age.
- Enjoyment of communal areas With no responsibility to maintain gardens or facilities.
- No hassles with repairs or maintenance These are usually dealt with by the scheme provider.
- Safety and security Life in a retirement village may feel safer than living alone.
- Guest suites Some villages have apartments available for friends and family to rent when they come to visit.
- Future care Some offer access to home help and personal care services or even an on-site care home.
- Limited medical care Not all retirement villages provide access to nursing or medical care.
- Cost You pay more for luxury – homes in retirement communities are generally more expensive than properties on the open market.
- Private funding Most retirement village properties must be bought or rented privately and are not eligible for public funding.
- Service charge Most charge monthly or annual fees for maintenance and facilities. These can be hefty, so make sure you know what they are before signing up.
- Extra fees There can be some unexpected costs, including exit or transfer fees (see more below).
- Reduced space If residents are downsizing from a larger property, there may not be space for all their possessions and furniture.
- Lack of diversity Some people might not want to live in a development exclusively for older people.
Hidden costs of retirement homes
Before deciding to move into a retirement village, make sure you’re clear about all of the costs and fees involved, as these can be significant.
Maintenance fees and service charges
If you move into a retirement village you will be charged a regular service charge, which covers running costs and maintenance of the development. Research by Which? in 2020 showed that service charges typically range from £190 to £840 a month, depending on the operator, location and facilities on offer. Be aware that council tax and utility bills are paid separately and will also need to be factored into your budget.
Before buying a property, find out how the scheme is managed as this can affect your finances considerably. Some retirement villages are run by a residents’ management company or a Right to Manage company, which generally have lower service charges. If not, the management will be run by the freeholders, and residents will have little say on what they are charged for repairs and maintenance.
Also find out what happens about the maintenance fees and service charges if you die. Often, retirement flats go back on the market when the owner dies, but the service charges continue to be charged until the property sells. This can result in thousands of pounds of fees adding up while your relatives try to sell the property.
Event fees are some of the most controversial charges included in retirement property contracts.
Retirement properties are usually sold on a leasehold basis. The lease often requires the owner to pay a fee for certain ‘events’, such as selling, sub-letting or transferring ownership of the property. These event fees (also known as exit fees or transfer fees) are additional charges built into the lease that you would not expect to encounter with a standard property.
The fees are calculated as a percentage of the resale price or market value of the property. Some schemes charge relatively modest rates of 1% to 3%, but others have fees between 10% and 15%. In some cases, you'll face a higher fee depending on how long you have lived in the property. Some schemes have resale fees that can reach as high as 30% of the property’s value.
Make sure you are clear on these fees before signing any leasehold contracts, and compare the rates charged by different operators. Look out for companies signed up to one of the following Codes of Practice, which each contain provisions about event fees and are designed to give residents greater protection:
- The Association of Retirement Housing Managers (ARHM): Private Retirement Housing Code of Practice
- The Associated Retirement Community Operators (ARCO): Consumer Code
- National House Building Council (NHBC): Sheltered Housing Code.
If the lease has less than 80 years to run it will prove costly to renew and the property’s value will also suffer. Check the length of the remaining lease is acceptable before buying, always taking into consideration the length of time you could possibly be living there before the time may come to sell.
Read more information about leaseholds and when they should be extended.
On a leasehold property, a tenancy is granted for a long period of time. It’s usual for leaseholders to pay a large amount upfront with smaller ‘ground rent’ payments to the freeholder annually. This may be as low as £50, but is usually around £300 to £500 a year.
Be aware that there have been some extreme cases where companies have increased ground rent by up to 90%, sometimes with very little notice. If you’re considering buying a retirement home, enlist the help of a solicitor to go through the terms and question how changes to fees and ground rent will be dealt with.
Conditions of sale
When reselling a retirement property (usually when the owner dies or goes into full-time care), you will usually have a choice between using an estate agent or the operator’s own in-house sales service. Be aware that some freeholders make it a condition of sale that you must resell through their company, so check the terms before buying.
Remember that the monthly service charge will usually need to be paid until the property is sold, so bills can mount up if a sale drags on.
10 questions to ask before choosing a retirement property
If you’re considering moving into a retirement village, ask yourself the following questions to help you decide if it’s the right move for you.
- What is the age limit? Some retirement villages have a lower age limit of 55 years; others say you need to be over 60 years old. If you’re planning to move with your partner, do you both qualify?
- How do the prices compare with sheltered housing or other similar-sized properties in the area?
- What are the service charges? This could make quite a difference to what you pay.
- Which bills are included? How much extra will you have to pay for the bills that aren’t included?
- What happens if you wish to resell the property. Will the operator take a cut of the resale value?
- What facilities and activities are there on offer? Are these included in the cost?
- Does the scheme offer any on-site services for residents who need additional care or medical support? If you need extra care in the future, will you be free to make your own arrangements if you wish to?
- If you have pets, can you take them? Not all developments will allow animals.
- Is there space to keep a car if you have one?
- Is there a guest suite or somewhere for friends and family to stay when they visit? How much does this cost?
Larger retirement village companies
Here are some of the UK's larger retirement village companies.
Anchor Hanover is well known for its many care homes around the country, but it also has retirement villages in Buckinghamshire and Hampshire. Each apartment has one or two bedrooms designed to help maintain independent living.
Audley offers the choice of a house, cottage or apartment in 20 retirement villages around England, from Yorkshire to Devon. It also offers care at home services. Each new property is sold with a lease of either 125 or 250 years, depending on the village, and you’re free to sell at any stage on the open market.
Inspired has 10 retirement villages spread around England, with several new villages also under development. The properties range from one to three bedrooms and each village has a range of facilities and care and support services. Rental options are available at most of the villages.
McCarthy & Stone
McCarthy & Stone has retirement properties all over the UK. It offers retirement apartments and assisted living apartments with an on-site restaurant and a range of care and support services. Properties are also available to rent at many of their locations.
MHA is a Christian charity providing care, accommodation and support services for more than 18,000 older people throughout Britain. It offers a range of retirement living communities, including retirement villages, apartments and other housing options. MHA also operates residential care homes that provide specialist dementia or nursing care.
Retirement Villages operates 16 villages across the home counties, the south west and the east of England. Most properties offer independent living only, but some sites also offer residential care, nursing care and specialist dementia care provided by the care home group HC-One.
Owned by Bupa, Richmond Villages offers luxury homes in 10 retirement villages for people aged over 55. Facilities include spas, swimming pools and gyms, hairdressing salons and beauty therapy and on-site restaurants. It also offers care at home services, plus a residential care home and specialist dementia care.
How to search for retirement properties
As well as the companies listed above, there are many other companies offering retirement properties. HousingCare has a directory of retirement villages, retirement communities and care villages in the UK.
The Associated Retirement Community Operators (ARCO) is the main body representing the retirement community sector in the UK. You can search for retirement villages operated by ARCO members on its website.