As experts warn leasehold homes sold to retirees are ‘terrible investments’, residents speak of being ‘ripped off’ with sky high bills
When Chris Palmer, 77, and his wife were looking to purchase a home, a retirement flat seemed ideal.
Palmer had retired in 2013 from a career in accounting and finance, and, being 65, started claiming his state pension. He’d been renting ever since he got divorced in 1995 and wanted the security of home ownership for his retirement. “We were paying £1,200 a month in rent and this was a better option,” he says.
They had read about “retirement” properties – flats in communal blocks only available to residents over a certain age – and found one in their home town of St Albans, Hertfordshire. It was reserved for people over the age of 55, and the prices were reasonable. They purchased their one-bedroom flat on the second floor for £115,000 – almost £500,000 cheaper than the average home in the area. They cashed in Palmer’s private pension from his self-employed job in finance to purchase it in full.
The property was a leasehold – which means the couple own the flat itself for a fixed period but not the land it stands on, which is owned by a freeholder. It came with a management charge, which started at £250 a month. At first this seemed affordable, given the cheaper house price.
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But in the past 10 years, things have become tougher. In the last four alone Palmer says it has risen to nearly £350 a month – so he now pays £4,200 a year, and says he sees little evidence of where this money goes. “The estate manager tests the fire alarms once a week and is responsible for contractors that come in, such as the gardener who comes for an hour once a fortnight. The lift and water sprinklers need to be tested but they’re all small tasks. An hour a day would probably be enough.”
Estate agent Hamptons estimated in 2025 that the average annual service charge for a leasehold flat in England and Wales was £2,300 – nearly half of what Palmer is paying. From 2024, there was an 11 per cent increase across the country in the charges, the biggest increase in eight years.
On top of their service charge, the management company Anchor have proposed works to the building that will total over £220,000 in the next four years, including £33,000 to rewire communal areas, £11,385 on external decorations and a new door system for £7,717. The residents currently have £141,000 in a reserve fund – a collective savings pot built up through service charges to pay for major, and usually unexpected, expenses for the building. It means the shortfall of £79,000 will need to be split and paid for by the residents. That’ll be over £3,000 each.
“It’s unnecessary and we’re being ripped off,” says Palmer. “As we get older we don’t have the same sort of income and it’s not as easy as it was. We’ve got people here in their 80s and 90s living on their pensions and it’s not easy.”
Palmer is one of a growing number of pensioners who feel “trapped” in retirement flats which have high service charges and are now difficult to sell. Those that do sell have lost considerable value. Palmer says the flat below him was bought for £147,000 almost six years ago and was recently sold for £89,000.
Property consultant Nathan Khider says: “A lot of retirement properties end up going for less money than what was originally paid, and unfortunately people just don’t want them – they’re not desirable. They look affordable but the problem is they’re not.
“They don’t sell well – if you look online they stick around forever and they’re expensive to live in. Everyone is sucked in because you can buy one-bedroom retirement homes in London, or on the outskirts, for £200,000 but they’re terrible investments.”
Almost all retirement flats are leasehold. In 2024 the Leasehold and Reform Act was passed, giving leaseholders fairer service charges, cheaper lease extensions and stronger rights. But Khider says it’s still essential for people to get legal advice when becoming a leaseholder.
Retirement flats are often marketed as providing community and convenience, but Palmer’s building has no communal areas, leaving residents feeling isolated.
“There’s no meeting areas, none at all, and the only space we get to meet as a community is outside when the weather allows it,” says Stuart Livingston, 73, who lives alone in the same building. “Personal relationships are almost not encouraged or promoted and it exacerbates our loneliness.”
Livingston, a retired carpenter, moved into the building three years ago, purchasing a one-bedroom flat on the ground floor. Before moving in, he says it wasn’t fully communicated to him what a leasehold property was, including that it’s his own responsibility to fix everything in the flat, although he doesn’t own the land or the full building. He believes the management company should have made this clearer to him so he knew what he was purchasing and what was involved.
“I can just about cover the fees,” he says. “I have a basic state pension and a small attendance allowance, this [government benefit] allows me to pay people if I need to hire someone to help me out in the home, but it barely covers it. I’m on a very, very tight budget, and a lot of it is down to the excessive service charge and what I get back for it. It’s certainly not value for money.”
He has untreatable lung cancer and COPD which restricts his mobility and ability to walk long distances. As he has no family around, he relies on residents to assist him for the basics, like shopping for food.
In November 2024, Palmer started the right-to-manage process, which allows leaseholders in England to take over building management from their freeholder. Although they had written support from 14 residents, including Livingston, it didn’t come to fruition. Two of the members in support were excluded, after one lady passed away and her daughter’s (who had inherited the property) vote didn’t count. Another was put into a care home.
Palmer personally paid £2,000 in costs, towards a tribunal and solicitor fees, but “a technical argument” that Palmer doesn’t know the full details of was submitted by the current management company that his legal team said would be difficult to fight. “Their argument was an 85-page submission and the solicitor suggested we pull out. Although we started off with the supporting numbers we had to withdraw at the last minute after evidence suggested one lady with the power of attorney over her mother may not have the right to vote. Our barrister said it’s more likely we’d lose.”
Since then, the management company has issued Palmer with a bill for £7,000 for their own legal costs, which he cannot afford to pay. “I”ve become frightened to answer emails because I’m wondering what they’re going to say next.”
The residents feel increasingly stuck, as they are also struggling to sell the flats. “As soon as people see the charge and what it entails they walk away from it,” says Livingston. “If I’d have known beforehand, I’d have taken longer to think about it too. Sometimes I do sit and regret it.”
But he remains positive. “It worries me but we’re hoping if we can fight for the right to manage it will improve and the value will come back up.”
A spokesperson for Anchor says: “The Right to Manage process was not successful for residents, and a £7,000 bill has been issued to Chris Palmer. In this case the Right To Manage (RTM) Company did not meet several key requirements under the Commonhold and Leasehold Reform Act 2002.
“Because the company continued with its claim and took the matter to tribunal despite these serious procedural issues, Anchor had to incur significant legal and professional costs to protect residents.
“In November 2025, the RTM Company formally agreed to pay £7,000 towards these costs. This is only a small part of what we have spent so far – more than £43,000 plus VAT.
“We are a not-for-profit organisation. Recovering these costs is not something we do lightly. They reflect what was necessary to respond to the RTM Company’s actions and to safeguard residents’ interests.”
They say service charges have risen across the housing sector due to higher insurance premiums, inflation and wider economic pressures, adding that the monthly service charge for Palmer’s estate has increased from £336 per month in 2025 year to £353 per month from April this year, an increase of around 5.3 per cent.
“It is important that we work with residents to avoid requests for large one-off payments when works are due as this can cause real financial hardship. To avoid this, sinking funds are set aside for planned maintenance and improvements over the long term.
“Our Be Wise services offers free, confidential advice to all Anchor residents. It covers a wide range of topics, including financial support and guidance.”
“We encourage people to look around the location before deciding if it’s right for them. Residents are made aware of the communal spaces when they visit and before choosing to buy a property.”