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Law Commission to review retirement property 'event fees'

Fees are typically set at 1 per cent of the property sale price, but can be as high as 30 per cent

29 October 2015

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The Law Commission has launched a consultation into 'event fees', which it says are 'hidden' within the leases of retirement flats and are catching owners and families out.

The fees are triggered when the property is either sold or subletted by the owner, but the Commission has said that 'owners are often not told about the fees until they have agreed to buy the property'.

Event fees are typically set at 1 per cent of the property sale price, but can be as high as 30 per cent in some cases. They are designed to make retirement flats affordable for the elderly, as it allows them to defer running costs until the property is sold.

Stephen Lewis, the Law Commissioner for commercial and common law, believes that if the sector is unable to deliver greater transparency and awareness of the fees, the public lose confidence in the whole sector.

'There are good reasons why they [older people] might want to defer some of the associated costs, and pay an event fee when the property is sold. But too many people are being taken by surprise by hidden event fees', Lewis said.

'With the number of people over the age of 85 expected to double in the next 20 years, we need more specialist housing for older people. Developers, landlords and all those who benefit from event fees must do more to make them transparent before the public loses confidence in this valuable sector.'

The consultation opens today (29 October) and considers what landlords, managing agents and developers should do to make the fees more transparent.

The Commission will also consider whether the courts' power to control 'unfair fees' should be strengthened.

The consultation will remain open until 29 January 2016.