Last April was a devastating time for Averil Smith. Within a matter of days she lost her mother and brother to Covid, and was left with the job of executing her mother’s estate.
Almost a year later, the 68-year-old is struggling to sell her mother’s retirement flat, despite dropping the price by £25,000 to below a valuation made in 2013, and has been sent bills for service charges she says she cannot afford to pay until it is sold.
So far, she has been billed for £1,800 but after being charged legal fees for missed payments, she was told that the sum owed had grown to more than £2,200. She told us she was frightened that the lease will be forfeited and that her attempts to offer guarantees, and a £10-a-month payment plan, had been refused.
Days after we contacted the management company, it dropped the extra fees and offered Smith longer to sell the property, but she remains worried about what will happen if it is not sold soon.
She is far from alone in finding herself landed with the problem of trying to sell a retirement flat that won’t shift while bills continue to mount.
In Smith’s case, the company that manages the property, FirstPort, refused her request to clear the bills when she sells, and asked for the money upfront.
Letters from its lawyers suggested she add the costs to an equity release loan her mother had, or auction off the flat.
View image in fullscreenAveril Smith is worried that the lease on her mother’s retirement flat will be forfeited.
Smith’s mother was one of the first residents of the Blythe Court retirement development in Solihull and had lived in her one-bedroom flat for 33 years. When she died, service charges and ground rents were up to date, and she had recently overseen the property’s refurbishment.
With the housing market shut down for several months at the start of the pandemic, Smith wasn’t able to put the property on the market immediately. It went up for sale on 26 June, and since then there has not been a single viewing, despite the price having been cut.
“The apartment is stunning – she had exquisite taste – and it is in a great location next to an upmarket row of shops,” Smith says.
“According to the estate agents, retirement apartments are not selling due to the pandemic, making them unattractive places to live for fear of catching the virus.
“Also, the people that want to normally buy them are reluctant to move house and, of course, there have been travel restrictions, which have made it difficult for relatives of prospective buyers to travel to view.”
Smith’s agents are not the only ones to make this point. In November, McCarthy & Stone, the retirement-home builder, reported that the coronavirus pandemic had led to a sharp fall in the number of properties it had sold to retirees, and that it would make a loss for the year.
It told the stock market that although sales had increased after the first lockdown, “sales have remained subdued as the behaviour of our customer base, which has an average age at the time of purchase of 79, has been more cautious than the broader population due to the risks associated with Covid-19”.
However, before the pandemic hit, people were reporting problems. In November 2019, the Guardian featured the case of a man who had been trying for four years to find a buyer for the one-bed McCarthy & Stone retirement flat in Kent that his late father originally bought for £161,950.
He said then that he was considering selling the property to a “buy-it-now” company for only £28,000.
In April 2018, a woman told the newspaper how she was struggling to sell the retirement flat her late parents had bought in 1997 and that she had been forced to cut the price from £185,000 to £140,000, well below the £260,000 average for a normal flat in the same Surrey village. In both cases, the four-figure annual service charge on the property was highlighted as a potential problem.
Smith, who has been furloughed and is concerned about the future of her job, says she cannot afford to pay the service charges that have landed on her doorstep. She still has her mother’s funeral to pay for and a £407 council tax bill for the flat.
“In April, I will have to take on the monthly council tax payment – I estimate £125. I have no idea how I will do this – I can only hope the apartment sells soon, so I can escape this,” she says.
“FirstPort is making no allowances for the current economic climate, the world pandemic, people being furloughed from work – and, as in so many cases such as myself, redundancy may loom. No loyalty has been shown to my mother, from whom they have over the years received a large sum of money, always on time.”
She says two auction houses have told her that they are not taking on retirement properties
Letters from FirstPort’s solicitors said it would go to court if the service charges were not paid, and suggested that Smith turn to the equity release lender or sell the property at an auction.
She says two auction houses have told her that they are not taking on retirement properties. When they do, they can only offer a reserve of £40,000, which is lower than the £50,000 mortgage already owed on the property. Adding to the loan would mean accruing interest on the charges.
Days after the Observer got in touch, Smith received a letter from the lawyers saying that the additional fees would be waived and that she had until mid-June to sell and pay the charges. But she is still worried about that deadline, and fears she will not be able to raise the money in time.
FirstPort says that service charges are kept in separate accounts for each development and used for maintenance, insurance and any staff who work there, and missed payments can cause shortfalls.
It said: “We are extremely sympathetic to Ms Smith’s situation and we have been doing all we can to support her with the sale of her mother’s flat.
“When a resident passes away, we, of course, put charges on hold until probate is granted. However, they can’t be paused indefinitely because any shortfall in service charges affects all the other retired people who live at the development.
“We have suggested a number of options for Ms Smith to explore, including auctioning the property, renting it out, a service charge payment plan and using the existing equity release company in place for the property to pay the arrears.
“So far, these options have not been pursued. We have put the account on hold for three months and we have offered to waive all fees and charges that have been incurred so far on the basis that Ms Smith actively reviews the options we have presented to her again.”
