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Fairhold Homes forced to climb-down on exit fees for retirement-home owners


Fees payable by owners of retirement homes who want to sell or sub-let have long been a bone of contention.

So the news is welcome that the Office of Fair Trading has announced an agreement on such fees with Fairhold Homes Ltd. , which owns the freeholds of some 53, 000 retirement homes.  

Retirement homes are typically owned on long leases, with the freeholders agreeing to manage and maintain the property. Such leases invariably contain provisions entitling the freeholder to a fee when a property is sold or inherited, and when the owner wants to sub-let it. These fees often amount to thousands of pounds as they are typically calculated as a percentage of the value of the property.

The OFT has been investigating these fees which it considers likely to be in breach of the Unfair Terms in Consumer Contracts Regulations 1999. As a result Fairhold has now agreed to make a number of substantial changes to the way in which it conducts its business.

No transfer fee in any new leases, and changes to existing leases

It will not charge a transfer fee in any new leases it obtains through the acquisition or development of properties, unless the fee is for a service and represents its reasonable costs.

Fairhold has also agreed to change how it enforces terms in the leases of its existing retirement home properties:


  • leaseholders will not pay any transfer fee when the lease is passed on through inheritance or surrendered, or when a relative or carer moves in with them.  
  • A flat fee of £85 (to be adjusted in future years in line with inflation) will be charged for sub-letting, replacing the current transfer fee of one per cent of open market value. This should make it more viable for tenants to sub-let properties they do not currently need to live in. Where it has discretion under a lease, Fairhold will also waive the separate contingency fund fee of one per cent of the open market value payable upon sub-letting. It will instead charge a fee equivalent to one month’s rent for each sub-let. Contingency fund fees are calculated in a similar way to transfer fees, but are paid into a ring fenced fund to pay for repair and maintenance of the development.
  • A transfer fee of one per cent will continue to be charged on sale. But it will now be calculated against the lower of either the price the tenant sold the property at, or the price the tenant originally paid for the property, rather than on notional open market value, which led to disputes about what the property was really worth.  
  • Fairhold will also provide potential new purchasers with clear information summarising all the amounts payable under the lease. This will be presented in an easy to read format accompanied by worked examples, helping potential leaseholders understand what they are agreeing to before they purchase.  


Vivienne Dews, OFT Executive Director, said:

“We are pleased that we have secured changes from Fairhold, which is a major player in the retirement homes sector. The changes will greatly reduce the circumstances in which transfer fees are charged, provide certainty upfront for leaseholders on their liabilities on sale, and improve transparency of costs for future tenants.

This case marks an important milestone in our continuing work to secure fairer and more transparent transfer fee terms for retirement home leaseholders. ”

This is a considerable victory for owners of retirement homes, and it is to be hoped that other freeholders will now see the light and change the way that they operate.

However anyone considering buying a retirement home should still obtain advice from a Conveyancing Solicitor on the exact terms of the property lease, as they will still be liable to pay service and maintenance charges.

Contact Fridaysmove on 0800 038 6446 for more information.  


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