Strawberry Hill House – Exit fees explained
There have been several reports in the national press recently about the high exit fees charged by some retirement villages when an apartment becomes vacant. There are concerns that such costs can run into tens of thousands of pounds, which may be a shock to any next of kin.
Such exit fees are charged in addition to the cost of buying or renting an apartment, and a regular service charge. Exit fees currently can be anything up to 30% of the original purchase price, dependent on the provider. The purchase price in these cases is based on the prevailing market price at the time – unlike Strawberry Hill House.
The issue is currently being investigated by the Law Commission, with an interim recommendation due to be published in Summer 2016.
To allay any fears, we would like to explain the pricing and exit policy for the apartments at Strawberry Hill House.
Pricing of apartments
The purchase prices of our apartments are around 30% less than comparable units in the local area. The pricing has been based on the cost of the development plus a contingency of 12.5%. It is the desire of the Trustees and prospective occupants that a Christian ethos is maintained at the development.
End of Tenure
Initially, the Trustees considered selling the apartments at or around market price and then allow the owners to sell on the open market. However, it was felt that this would create many problems at the end of the tenure, i.e.
- Who the apartment is sold on to?
- Will the new owner agree with the Christian ethos of the Trust?
- What price is it advertised at?
- Who decides market value?
It is for these reasons that the Trustees have decided to buy back any apartments at a price related to the original purchase. We felt that this was the fairest way to maintain our distinct position. When an apartment becomes vacant, the Charity will pay the owners 10% less than the original purchase price, subject to the Terms & Conditions of the Lease.
This guarantees a buyer for the apartment at a fixed price, enabling both parties to budget for the future. The exit fees will be used to ensure the service charges remain low, to establish a refurbishment fund and to ensure future occupants can purchase an apartment at low cost.
If you have any concerns or questions about exit fees, please do not hesitate to contact us.