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ARCO Response to BBC One Show report on retirement communities for older people

BBC1’s The One Show, broadcast on 22 November 2016, addressed the use of event fees in retirement communities, and the need for higher clarity on all forms of fees and charges.

Retirement communities combining care, support and housing are a relatively new form of housing for older people in the UK, and are a vital way of meeting the housing and care needs and aspirations of our ageing population. [1, 2] Many leasehold retirement villages feature ‘event fee’ models where a payment is due when properties get sold on. [3]

ARCO has consistently argued that event fees in retirement communities should be clearly and transparently disclosed. Our members believe that it is vital that prospective customers receive clear and transparent information about all fees and charges up-front so that they can make fully informed decisions about whether to buy into a retirement community. [4]

To this end we launched the independently assessed ARCO Consumer Code in 2015, which requires members to provide customers with clear information on all fees and charges (including event fees but also service charges) at an early stage in the purchasing process. ARCO have also supported the Law Commission’s work on a statutory Code which would bring in greater regulation of event fees, and clearly spell out the disclosure process that retirement community operators and retirement housing developers would need to follow. [5]

Event fees such as deferred payments can make a positive contribution to residents’ lives by providing certainty and making service charges more affordable. Event fees can also allow for the development of more extensive facilities within retirement communities. It is notable that in countries such as Australia and New Zealand – where retirement communities are much more common –  event fees are well established and understood.

Michael Voges, ARCO’s Executive Director said:

“Retirement communities are a unique housing option which enable older people to live happier and healthier later lives. They reduce loneliness and prevent moves to residential care – and are a vital way of meeting the housing and care needs of our ageing population.

When transparently disclosed, event fees can play a key role in allowing older people to benefit from life in a retirement community with extensive facilities, and many consumers favour an ‘enjoy now, pay later’ model that uses event fees. But transparent disclosure is absolutely key. ARCO has long argued for higher and more consistent disclosure of all charges, including event fees and service charges, and we will continue to press for higher standards in the marketing and operation of retirement communities.

Ends

Notes for editors

  1. Retirement communities combine high quality housing options for older people with tailored support services. Unlike care homes, they allow residents to rent or own a property and to maintain their privacy and independence. But in contrast to traditional retirement housing, they also offer the reassurance of 24-hour on-site staff, communal facilities (which could include dining options, leisure facilities, gyms or pools) and optional on-site care and support as needed. Retirement communities may also be referred to as retirement villages, extra care housing, housing-with-care, assisted living schemes, very sheltered housing, or close care.
  2. Owing to their unique service offer, research has found that retirement communities reduce social isolation, and residents in retirement communities are around half as lonely as those living in the community. They are also healthier, and are half as likely to enter institutional accommodation such as care homes, compared to those in general needs accommodation. This benefits individuals, their families, and reduces pressure on struggling health and social care services.

Please see: Beach, B. (2015) ‘Village Life, Independence, Loneliness, and Quality of Life in Retirement Villages with Extra Care’. International Longevity Centre, London http://www.ilcuk.org.uk/index.php/publications/publication_details/village_life_independence_loneliness_and_quality_of_life_in_retirement_vill and Kneale, D. (2011) ‘Establishing the extra in Extra Care: Perspectives from three Extra Care Housing Providers’. International Longevity Centre, London http://www.ilcuk.org.uk/index.php/publications/publication_details/establishing_the_extra_in_extra_care_perspectives_from_three_extra_care_hou

  1. Event fees are used by many operators in the housing-with-care sector, and are the name for a percentage-based fee that is charged in the event of a property being sold. Event fees can be an effective way of reducing service charges for older people (for example, an operator might charge a percentage fee to go into a sinking fund. In return, the resident’s service charge could be reduced, leaving residents with more disposable income from their pension). Service charges can also contribute towards the capital costs of communal facilities, or provide a long term return for the operator involved in running care, catering and management services on site.

More information about event fees, including a case study of a resident explaining the importance of transparent event fees can be found here:  http://arcouk.org/2015/11/new-consumer-code-launched/

  1. The Associated Retirement Community Operators (ARCO) is the main body representing the retirement community sector in the UK. There are currently 27 ARCO members, representing more than 400 retirement communities and over 50 per cent of all housing-with-care schemes in the UK. ARCO members include both private providers and not-for-profit providers.
  2. The ARCO Consumer Code was launched in 2015 to provide a benchmark for good practice within the housing-with-care sector. The Code applies to retirement communities in the UK that have been registered with ARCO by Approved Subscribers to the ARCO Code. Operators who sign up to the Code must ensure that prospective residents are given clear and transparent information about fees and service charges well before they decide to move in. Retirement community operators must also provide core levels of services in retirement communities, and must maintain a fair and consultative relationship with residents. To ensure that standards are met, the Code is supported by a robust standards and compliance framework. External assessors conduct independent reviews of services against the Consumer Code on ARCO’s behalf. These assessors monitor Approved Subscribers’ compliance with the Code, and ARCO take action as necessary when standards are not met.

More information about the code can be found at the following links: http://arcouk.org/news/page/3/ and http://arcouk.org/consumercode/.