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Updated: 15 Nov 2021

Additional costs of sheltered housing

We explain the additional costs of sheltered housing such as service charges, ground rent, the reserve fund and bills, plus transfer and permission fees.
Which?Editorial team

How much does sheltered housing cost?

Sheltered housing can be a good solution if you want the reassurance of living in a safe and secure environment, while still staying independent. How much it will cost depends on what type of sheltered housing arrangement you opt for:

  • Council and housing association schemes: you will be charged an affordable rent, usually lower than standard market rates, and you may qualify for financial assistance – but you will need to pass certain eligibility criteria to qualify for a place.
  • Renting privately: you will pay rent that’s similar to a standard market rate for your area.
  • Buying sheltered housing: you will purchase the home on the property market, as you would a normal leasehold property.

Find out more about the pros and cons of these options in our guide to sheltered housing

But whichever option you choose, there can be various additional costs involved, so it’s important to factor these in before moving into sheltered housing.

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, so always check the terms for reviewing and increasing the ground rent.

Service charges

It’s normal to pay a service charge on any leasehold flat to pay for things such as maintaining communal areas and buildings insurance. The management organisation will also charge for providing their management services. However, because sheltered housing can include 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 £150 to £300 per month, or considerably higher for a luxury property.

Residents are entitled to see a breakdown of what the service charge covers and we recommend that you ask the following questions ahead of signing any contractual agreement. 

  • How much is the service charge?
  • What is included in the service charge?
  • Are there any additional services I will need to pay for and, if so, how much will they cost?
  • Are any of the service charges covered by Pension Credit or Housing Benefit?

Be warned that fees such as the service charge are ongoing, regardless of whether the property is occupied. So if you had to move into alternative accommodation or were in hospital for a long period, the charges would continue to apply. 

We have heard of situations where the services provided may change – for example, a service manager was previously on site 24/7, but this later changes to daytime only – but the service charge isn’t altered accordingly. You should ask for any changes to the services or charges to be sent to you in writing.

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%.

Transfer fees (also called event fees, exit fees and deferred management charges) are often used by retirement housing operators to ensure a constant income. This 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.

The Law Commission has issued a set of recommendations to reform the law. These aim to give greater transparency where a transfer fee is payable upon the sale of a retirement property, and ensure that consumers are provided with clear information about the fees at an early stage in the purchase process.

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 carefully and seek legal advice if necessary.

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 normally responsible for bills for their own properties, such as:

  • telephone
  • internet/wi-fi
  • electricity and gas for their own flat
  • water
  • contents insurance
  • Council Tax
  • TV Licence. Check if you qualify for a concessionary Accommodation for residential care (ARC) licence, which costs £7.50 per room, flat or bungalow. Over-75s who receive Pension Credit qualify for a free TV licence.
  • help with housework, such as gardening and cleaning.

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