Event fees are an intrinsic part of the retirement village model. Used properly, they allow operators to invest in upgrading and maintaining communal facilities to the high standard required.
These benefits are achieved through a clear and transparent understanding that fees are payable on the occurrence of particular events, such as sale, subletting or change in occupancy.
Unfortunately, such transparency is not universal, which has led to the Law Commission review into the operation of event fees. The commission has made various recommendations designed to protect consumers and regulate event fee charges, with a voluntary code of conduct for operators being the key proposal.
These proposals are being considered by the government and, if approved, will apply to all new leases and, where a landlord subscribes to the code, to existing leases as well.
The code is likely to seek limits on the conditions under which event fees may be charged and, in certain circumstances, the amount payable to be potentially capped. However, the Law Commission is aware of the need to balance the requirement for consumer protection against the requirement for greater investment within this fast-growing specialist housing market.
Transparent information
The code will seek to impose obligations on operators to provide transparent information about event fees early on in the purchase process, including an indication of how much the event fee is likely to be and when it is payable. While this may be tricky for operators, it is an opportunity for them to embrace the change by signing up to the voluntary code.
While the code of conduct would be voluntary, proposed amendments to the Consumer Rights Act 2015 would mean that any breach of it would be presumed unfair and unenforceable. It is therefore vital that operators ensure their sales processes and legal documentation comply with the code.
The Law Commission review has been welcomed by sector operators, with the Associated Retirement Community Operators - the main body representing the UK’s retirement community sector - hoping that the reforms “will lead to increased supply of specialist housing that addresses the housing and care needs of our ageing population”.
The hope is that regulation will lead to more certainty and greater transparency over event fees, which can only be a good thing for consumers, operators and investors alike.
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