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Why A Flat In Folkestone Valued At £161,000 Is Still Unsold at Just £59,000
As the first buyer of a new McCarthy & Stone retirement development in Folkestone, you would expect to be offered a great deal. A forward-thinking retiree was offered an ‘early bird’ discount of £3,000 for a one bedroom flat. This took the total asking price of the flat to £161,950 which by market standards in 2007 was relatively affordable.
Since inheriting the flat in 2015 the buyer’s son has been unable to sell and is now becoming so desperate that he is considering an offer of just £15,000 from a specialist quick home buying company.
How could a high-quality apartment built as recently as 2007 have plummeted in value so aggressively, particularly when considering the average apartment price in Folkestone increased by approximately £25,000 during the same period? What happened to this McCarthy & Stone flat?
Poor Resale Value Accusations
With more than 1,200 developments across the UK, McCarthy & Stone is a market-leading developer of retirement flats. Nevertheless, the company has been accused on several occasions of building and selling flats with very low resale values.
The retirement flat in Folkestone was put on the market in 2015 for £143,000. After which, it was reduced in price exponentially over the years, eventually falling to just £59,000. Even at this low price, nobody has expressed any genuine interest in buying.
Far from an issue with the quality of the apartment, the main problem appears to be with excessive monthly service charges payable on the flat. A charge which its current owner claims has reached a whopping £562 per month, the equivalent of paying almost £6,750 per year. This could theoretically swallow up the entire state pension of the occupant, simply to cover ground rent and general services.
In the meantime, the flat’s current owner has been forced to cover these charges on behalf of his late father. He has so far handed over approximately £18,000 in monthly charges and has spoken of his genuine fears of bankruptcy. Incredibly, one of the UK’s leading quick home buying services has now offered just £15,000 for the apartment, more than 90% less than its original purchase price.
“In total it’s costing me £900 a month to keep. I’ve got my own home to pay for and you can’t run two houses on a normal wage. It’s been one huge money pit. One of the buy-it-now companies has offered me as little as £15,000 for it. The stress has been so much and to be honest it’s made me so stroppy and moody, it’s cost me my relationship too,” he told reporters.
No Isolated Incident
It’s of no consolation to this particular individual but the issue regarding terrible resale values on McCarthy & Stone properties is far from isolated. In the exact same development, a flat that was purchased in April 2010 for £150,000 sold in 2018 for just £75,000. Another with an initial value of £151,000 fetched just £105,000.
One of the two bedroom McCarthy & Stone properties on the same development is up for sale right now at £45,000, billed as the cheapest property in the whole of Folkestone.
One of the issues causing the enormous depreciation of such properties is comparatively low demand. The flats are exclusively available for couples over the age of 55 or individuals over 60, who may also struggle to qualify for mortgages against such properties. They are beautiful flats at giveaway prices, though are made inaccessible by the excessive monthly service charges and ground rent.
Shortly after building the development, known as Laurel Court, McCarthy & Stone sold the freehold to a company based in the British Virgin Islands. Having initially charged around £350 per month in charges, FirstPort gradually increased it to more than £500 over the following years.
FirstPort provided the following statement when contacted by the press:
“Laurel Court is an assisted living development with enhanced communal facilities such as a restaurant, dining room, function room, restaurant kitchen, staff room, sleepover room, and two lifts. This does mean that it requires a more comprehensive level of servicing and the service charge is higher than it would be on a non-assisted living development.”
“We clearly explain our charges to customers and share budgets with them before the final bill is agreed so that we are completely transparent and there are no surprise costs.”
“We know our customers have the peace of mind that day-to-day home maintenance tasks are taken care of, like mowing the lawn, as well as the bigger jobs, like refurbishing the lifts. Having an estates manager and other on-site staff available 24/7 in an assisted living development offers safety and security that is really valued by our residents and their families. Our customers tell us that the quality of life and the sense of community and companionship that comes from living in a communal, managed development has enhanced their lives greatly.”
Likewise, McCarthy & Stone stopped short of accepting any wrongdoing or even offering an apology to those affected:
“The vast majority of our managed properties increase in value on resale. To help improve this further, we launched a new in-house resales operation in 2017 to support our customers and their families when they come to sell their property. We urge anyone seeking to resell their property to use our in-house service.”
“The value of retirement housing is not just financial. Retirement communities help to reduce the burden of maintenance, increase safety and security for the elderly and reduce loneliness. Nine out of 10 of our customers say moving to one of our properties improves their quality of life.”The seller in this instance contacted McCarthy & Stone to request their “in-house service” though was rejected and refused any further assistance.