Guest blog: Tim Calland on event fees in retirement property

19 April 2017

In March 2017 the Law Commission published its report on Event Fees in Retirement Property, which followed a consultation carried out in 2016 on its proposals for reform of the law in this area. The report makes a number of recommendations to government for the reform of event fees.

"Event fees" refer to charges payable to providers of specialist retirement property by owners of such property on the happening of certain events, the most common of which is the sale of the property to a new owner. These fees have become an important part of how providers of retirement property fund the services that are typically offered to the owners of such property, which can range from ordinary maintenance and management charges to the provision of care and support for the residents of the relevant development. The cost of these services can be high and might be unaffordable to the retirement-property owners, who are often asset-rich but cash-poor. For this reason the cost of the services is often recovered in part through these event fees.

The Law Commission identified a number of concerns with the way that the charging of event fees can operate in practice. Often the level of such charges and the events on which they arise is poorly understood by those purchasing retirement property. The terms relating to these charges are not always transparent to consumers and may not be fully explained before someone makes a decision to purchase a retirement property. Furthermore they may be presented to consumers in a way that exploits their behavioural biases so they are less likely to figure in the consumer's decision-making. There were also concerned about the level of charges in some cases, which is not always related to the cost of a service provided to and used by the owner of the property.

The Law Commission has recommended that providers of retirement property be required to comply with a code of practice that limits when event fees can be charged, so that the chance of owners being surprised by unexpected charges is reduced. The proposed code also places a cap of the amount of the fee that could be charged on a sub-letting or change in occupancy. The code also requires clear information on such fees to be provided to prospective owners before their purchase. The proposal is that the code of practice would be enforceable by owners through the medium of the Consumer Rights Act 2015.

The Bar Council responded to the Law Commission's consultation, and members of the Law Reform Committee met with the Law Commission team responsible, providing detailed comments on many of the consumer-law and property-law aspects of the proposals.

Tim Calland is a barrister at Maitland Chambers and a member of the Bar Council's Law Reform Committee