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Retirement housing developers slam government ‘U-turn’ on ground rent ban
Retirement housing developers have slammed the government’s announcement yesterday that it will not exempt the market from zero ground rents on new builds.
Long-awaited changes to leasehold law were unveiled yesterday which will allow leaseholders in England to extend their leases by up to 990 years at zero ground rent.
As part of the announcement, ministers reversed a previous decision to exempt retirement properties from a promise to reduce ground rents on most need leasehold homes to zero.
The government said the move will protect older people from “uncertain and rip-off practices”.
But John Tonkiss, chief executive of retirement housing giant McCarthy & Stone, said the market had been “caught in the crossfire of leasehold reform which was intended to address bad practices elsewhere in the housebuilding industry”.
Under existing leasehold law, ground rents must be paid annually by leaseholders to freeholders who can increase fees at their discretion without providing extra benefit to leaseholders.
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Mr Tonkiss argued: “Our ground rents have always been charged on fair, transparent and stable terms and fixed for 15 years.
“They have been used for the dedicated purpose of helping fund the construction of shared spaces within our developments which provide a clear and substantial benefit to all our homeowners.”
Spencer J McCarthy, chair and chief executive of Churchill Retirement Living, said: “I am shocked and disappointed at this government’s U-turn on its own previous recommendations by the last two housing ministers for the retirement housing sector to be exempt from the ground rent ban.”
He argued that by charging “reasonable” ground rents, the company is able to keep purchases prices lower and is able to fund upkeep on communal areas.
“At a time when our business already faces a mountain of challenges to continue keeping people safe from COVID-19, this abrupt last-minute change of heart from government will seriously impact our ability to provide older people across the country with the specialist housing they need,” he added.
But the Associated Retirement Community Operators (ARCO) trade body believes the changes will not impede the sector’s ability to provide quality retirement community.
Michael Voges, executive director of ARCO, said: “Developing the new generation of retirement communities that Britain needs was never dependent on ground rents.
“We welcome the opportunity to work with the government to develop bespoke alternatives that work better for residents and operators of retirement communities alike.”
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