Families have lost their life savings after buying retirement flats from one of Britain’s biggest property developers, an investigation by The Times has found.
The value of thousands of properties built by McCarthy Stone have plummeted over the past 15 years, leaving many owners trapped with homes they struggle to sell while having to pay huge monthly charges for services they may have stopped using.
Analysis of 16,000 Land Registry records since 2010 shows that nearly 60 per cent of McCarthy Stone flats that have resold have lost money, leaving their owners £41,000 worse off on average.
Some of the losses have been catastrophic for the families involved. In one extreme case, a property in Lancaster lost 88 per cent of its value in just seven years, falling from £285,000 to £35,000 when it was sold in July.
The largest single loss was of £326,000 on a flat in St Albans, which fell from £470,000 in 2017 to £135,000 in 2023 — a loss of £1,000 a week. It would have been cheaper for the elderly owner to have stayed at the Hilton.
However, McCarthy Stone insists that the majority of its flats increase in value once you take into account the financial incentives it offers buyers when they first purchase, such as moving costs or stamp duty.
Despite the scale of the losses, McCarthy Stone has been given £94 million of taxpayers’ money by Homes England to subsidise the construction of 1,500 shared ownership flats for older people since 2021. The government agency has admitted that it did not review resale values before approving the money but intends to continue working with the firm.
Losing value
The Land Registry figures show that 59 per cent of McCarthy Stone properties built between 2010 and 2019 and then re-sold have fallen in value. The average loss is 16 per cent but one in fifty homes have lost more than half their value.
Over the same period, the Halifax house price index has grown by 42 per cent although the value of flats has increased by less.
The full scale of the losses could be in excess of £167 million, including the 8,000 McCarthy Stone flats that have yet to come on to the market.
Only 41 per cent of flats that have re-sold have increased in value, with an average gain of 10 per cent.
McCarthy Stone’s retirement flats are leasehold properties, with leases of between 125 and 999 years, in communal blocks where residents pay ground rent and a service charge, which varies depending on what is offered. In most developments, the charge covers a site manager and shared living room but some sites also offer 24-hour staffing and catering.
The data reveals that properties with the highest service charges have lost the most in value. For example, 68 per cent of the company’s Retirement Living Plus properties have fallen in value once re-sold, with average losses of £55,000.
Extra fees
Families of people living at McCarthy Stone developments have expressed surprise at charges faced by their relatives.
At Corbett Court in West Sussex, where owners already pay up to £14,000 a year for 24 hour staffing, residents must pay extra fees for “lifestyle” call outs. In one case, an elderly resident was charged £8.54 for an on-site staff member to come to their flat to pick up a remote control.
A group of owners calling themselves the “McCarthy Stone Hostages Group” has written to the company saying the high charges are making it incredibly difficult to sell their homes.
At present 18 of the 56 flats at the block are for sale and Land Registry records show that over the past two years, only those willing to take huge losses have managed to sell.
In June 2023, for example, one family accepted an £85,000 loss on a flat that had cost £285,000 five years earlier.
The letter details grievances from what it says are poorly maintained outside spaces to “rude” staff, but focuses on the “shocking” charges.
It claims that many residents move into the building on the mistaken assumption that the 24-hour staffing they pay for within the service charge will cover them when they need emergency support, such as a fall. But there are in fact a series of extra charges for such events.
The annual service charge at Corbett Court is £13,500 a year for a two-bed flat, and £10,000 a year for a one bed. This covers an hour of domestic help a week, usually cleaning, and an onsite catering service. However, residents must still pay £6 every time they eat.
The service charge also covers the cost of the communal areas, buildings insurance and water rates but residents must pay a further £435 in ground rent each year and £250 a year if they want a parking space.
Georgina Tidey, 41, and her siblings inherited a flat in the development when their mother died two years ago but they have been unable to sell it despite asking for £40,000 less than their mother paid.
The HR manager says the number of empty flats is a real problem. “It means current residents have half the community they expected — shown by the lack of activities and uptake in meetings — and this makes the place less desirable.
“Also with so many other flats available, prospective buyers just have such a huge choice.”
She explained that the experience has been “emotionally and financially draining”.
“Families like ours just have to sit there and watch as the money their relatives worked so hard for just drips away,” she said.
Tidey believes McCarthy Stone does not care enough about empty flats because it means it has to provide fewer services.
She said: “The empty flats leave 18 hours of undelivered domestic help every week and the restaurant is not having to deliver a full service yet still costs leaseholders nearly £120,000 a year to run, which itself was an increase of £20,000 on the previous year. The costs seem unusually high.”
McCarthy Stone insists its business model works well for the elderly and said charging for additional support offers flexibility to residents. It added that its fees are in line with local rates.
A flawed model
With sales of McCarthy Stone’s flats flagging after the pandemic struck, the private equity-owned company has pivoted towards shared ownership, where it gets a taxpayer subsidy to build developments in exchange for offering buyers the option to part-own and part-rent a property.
The government supports shared ownership under a policy to expand home ownership to retirees who might not otherwise be able to afford to buy. However, campaigners say the scheme is flawed.
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Sebastian O’Kelly of the charity Leasehold Knowledge Partnership, said: “It’s outrageous that Homes England is doling out taxpayers’ cash to such a failed business model. Obviously it hasn’t done adequate diligence.
“Selling people in advanced old age long leases with a significant capital outlay is no way to run retirement housing. Shared ownership adds an extra layer of complexity but investors have clearly seen the financial opportunity.”
While campaigners are calling on the government to halt funding for shared ownership retirement flats, McCarthy Stone has been lobbying ministers to expand the scheme.
In September the company attended the Labour Party conference where its representatives spoke with ministers and influential MPs while Angela Rayner, who is now the housing secretary, visited a McCarthy Stone development when she was in the shadow cabinet.
Alternate incentives
Michael Voges, chief executive of Arco, a trade body for retirement communities, says there are alternatives to the McCarthy Stone model.
He points out that retirement developments that do not have high service charges and instead levy a fee on the resale value when the resident dies have grown in price.
He said: “These ‘event’ fees give operators a clear interest in the resale price, meaning they ensure schemes are popular and well-maintained. They can also use the income to keep monthly management fees affordable.”
Value for money
The company insists most of its properties increase in “net value”. By this it means once its own costs in facilitating the sale are deducted from the sale price.
In a statement, McCarthy Stone said: “We provide a range of ways to support customers to move once they have decided to buy their new property, often paying the costs associated with part exchanging their original home and moving costs. This assistance can total tens of thousands of pounds and is not captured by the Land Registry.”
The company declined to provide a figure for the average value of the incentives, arguing it was commercially sensitive. In 2019 it claimed that 70 per cent of its apartments increased in actual value — a statement that appears at odds with the Land Registry data.
On resales, it advises owners to use its in-house resales team because it “fully understands” how to market the flats.
It also defended the service charges. “[The charges] pay for the services provided within the development that improve people’s lives. They are charged without any mark up and are tightly regulated by legislation.
“A retirement property is more than bricks and mortar. It maintains people’s independence, providing safety, security and support through our on-site teams, alongside a greater sense of community. That’s why more than 90 per cent of our new customers recommend us each year.”
A spokesman for Homes England said that McCarthy Stone Shared Ownership was one of 32 providers it worked with to deliver the government’s Affordable Homes Programme.
He added: “Before any partner receives grant funding, extensive due diligence checks are undertaken to assess the suitability of the providers, including their experience and ability to undertake new developments, how they appoint consultants and contractors, and their approach to quality and risk assessments.”
