Law Commission calls for event fees in retirement properties to be regulated

“We consider that event fees should be regulated with the introduction of a new code of practice,” says the Law Commission. It is referring to specialist retirement properties which are almost always sold on a leasehold rather than freehold basis. Many of these leases require the owner to pay a fee on certain events – such as sale, sub-letting or change of occupancy. These are “event fees” and used to be known as “transfer of title and change of occupancy fees”.

In 2013, the Office of Fair Trading investigated the use of transfer fees. They found that terms in leases imposing this type of event fee were potentially unfair. As a result, in 2014, the Department for Communities and Local Government asked the Law Commission to investigate.

The Law Commission says: “Our research – involving a review of the law, a series of meetings, open public consultation and a mystery shopping exercise – has shown that there are major problems with event fees. We found that in some cases:

• event fees can be hidden in complex leases
• leaseholders may be charged unexpectedly – even when their spouse or carer moves into the property
• event fees are often disclosed too late in the process for the consumer to take the fee into account
• that if consumers do spot event fees, they may fail to appreciate their financial consequences
• The ageing population means that the number of people likely to be affected by event fees on retirement properties is likely to increase.”

The Law Commission recommends regulation and a new code of practice but not that event fees should be abolished. After all, it says that event fees can make specialist housing affordable by deferring part of the payment for services until they come to sell.

The Law Commission’s report is available at: http://www.lawcom.gov.uk/wp-content/uploads/2017/03/LC-373.pdf