Nicholas John talks to Jamie Bunce, Managing Director of Inspired Villages, about the costs of living in a retirement care village
The attractions and advantages of living in a care village are obvious, but I would imagine it must be an expensive option for many people. Can you tell me more about the costs involved?
Well of course there are cost implications of living in one of our villages, but nowadays it costs everyone to live anywhere! The majority of our residents have spent their lives living in their own property under freehold ownership.
The idea of moving to our village and purchasing an apartment under leasehold ownership could be new and the concept of a lease, ground rent and service charge might be completely alien to some people.
However, for anyone who has lived in an apartment, probably in a town or city, then the legal structure of the care village is only an extension of something they might already be familiar with.
Residents of our villages pay a service charge, which covers the services and facilities provided, together with an assignment fee when the property is eventually sold.
I have a couple of key questions for you Jamie: firstly, why do residents have to purchase a leasehold property and not freehold? And secondly, what exactly would I get for my money from this service charge?
If you own your own home, it sits on a piece of land that you own. If you own an apartment, then it and others are stacked on one common piece of land.
Leasehold means that not everybody can possibly own that one piece of land, so the landlord retains the ownership of the land and a long lease is created for each apartment owner.
A resident will purchase a long leasehold interest for a fixed term, often 125 years, and you would own this lease for the full length of this term. You would then pay a ground rent on the land, typically around £500 per annum initially, although this can rise over time with inflation.
The idea of owning my own property as leasehold and paying ground rent is fair enough, but a large additional service charge creates another big expense for a potential resident. Can you explain how this charge works and how much does it cost?
You pay a service charge of around £6-7,000 per annum. Our care villages employ more than 50 staff with a wide range of skill sets. These include maintenance and grounds staff, receptionists, chefs and table staff, cleaners, carers, nurses, social activities organisers and managers: all in all, a substantial operation.
In order to maintain this high level of support we make a charge, per apartment, per annum to cover the usual items found in respect of any flat or apartment, including maintenance and cleaning of communal and garden areas. It will also cover building insurance, repairs and renewals, plus all other services specific to a care village.
These comprise reception services, chauffeured transport, emergency response, the restaurant and dining facilities, broadband and telephone line rental, the spa and wellness centre and the business rates for communal facilities. We include a charge to administer these services.
You've mentioned an assignment fee; what is this and why is it needed?
As assignment fee is called an exit fee, or a deferred sinking fund or event fee, and is equal to 10 per cent of the sale price. It comes into effect when the property is sold. Part of the assignment fee is used to build up a sinking fund for the replacement of major structural items and equipment.
A percentage of this fee is also used to offer bursaries for our carers to be trained for wider functions within the village and community.
Will the assignment fee help reduce the service charge?
In short, yes. We set up and control the charging structure to recover the costs of providing all the services and facilities.
A small part of the service charge will not cover the costs for major replacements and to maintain the overall facilities as we require.
We provide for a sinking fund by using part of the assignment fee when the property is sold. Using a combination of the service charge and assignment fee for the sinking fund helps to keep the annual service charge to a minimum.
What if I need more personal care?
If you do need additional personal care, there will be a charge for specific care requirements on a menu of services so if, for example, you need an hour of care every day, then you will pay the hourly rate of typically £18 per hour for that support.
With care home charges usually in excess of £800 per week or £40,000 per annum, the ability to stay in one’s own home with care and support available as required is significantly less expensive and a more attractive option.
We are proud to offer everyone living in an Inspired Village a combination of manageable and transparent service charge, together with the assignment fee.
This enables all residents to enjoy the benefits of a superb long-term living environment, complete with a highly motivated and well-trained staff.
To find out more about Inspired Villages in Warwick and Tattenhall, Cheshire visit www.inspiredvillages.co.uk
Or call Warwick: 01926 683 513 or Tattenhall, Cheshire: 01829 289 123