This is my fourth report from the ARCO conference – July 2016. (See my earlier blogs “ARCO Conference Demographics”, “ARCO Conference Dementia” and ARCO Conference Marketing” in the archive dated July/August 2016.)
The discussion on this subject was made up of a number of talks which embraced not just regulation but also funding models. It’s the use of different charging approaches, many of which can be difficult to understand, that has led to the increased interest of the regulators.
The first problem is that there is no clear definition of where retirement communities fit in to the historical regulatory structures. Many of the providers use different models and different terminology to describe their provision, but at the same time there are significant overlaps between providers. This make comparison of schemes difficult.
The size and shape of schemes provided by different developers varies enormously. As do the level of services offered. This all makes it doubly difficult for the Regulators to see how accommodation provided by the ARCO members should be regulated. The Care Quality Commission has in the past been preoccupied with residential care homes. More recently they have broadened their remit to include hospital accommodation and at the other end of the spectrum, domiciliary care provided to people in their own homes.
Although many retirement housing and care providers now go beyond the provision of sheltered housing, they generally stop short of providing 24/7 care. This means that essentially they are only providing domiciliary care to a limited number of residents, who continue to live in their own homes.
The Regulator seems to have concluded that in these circumstances they only have a “domiciliary care” remit and should not be involved in the physical fabric of the homes themselves.
However, where things get more difficult, is when you start to look at how people are charged to live in this accommodation. The different financial models have in some cases led to criticism and claims of exploitation by residents who have purchased homes without realising the financial commitments they were entering into. This has attracted the attention of a different Regulator, namely The Law Commission.
Different providers have all sorts of different ways of maximizing their charge for a property. There are a host of different terms used which come under the collective title of “Events Fees”. These can include:-
- “Exit Fees” or “Transfer Fees” – this refers to charges made when you leave the property either to move elsewhere or when you die.
- “Deferred Management Charges” – these usually relate only to the deferred charge for planned maintenance which has the effect of lowering initial service charges. Providers charge these out at different rates, some of which are seen as punitive.
- “Assignment Fees” – this is a charge that goes to the freeholder whenever a property is sold on. It is usually a charge of 1% of the purchase price although there seems little justification for this.
- “Sub Letting Fees” – this is a charge if someone chooses not to live in the property but to let it to someone else, or more frequently perhaps to sub-let it if relatives are unable to sell the property after the owner’s death. Again these are typically charged at 1% of the rental value.
There is more information about these charges in my earlier reviews of some retirement housing providers which you can find by clicking on RETIREMENT HOUSING in the TOPICS LIST and looking for Retirement Housing Reviews.
My observation on the whole of this subject is that there is little appetite by the Regulators for more regulations in the sector. However, there needs to be much more transparency about charges, particularly those where there is an element of deferment until the property is resold. As the market stands currently, it is wide open to exploitation by unscrupulous developers who have their eye on immediate returns rather than long-term value for money for their customers.