High management fees in complex for over 55s - worth it or not?

CamillaRhodes

Hi there. My parents, both early 60s, are splitting up (finally) and selling the family home to buy smaller places of their own. Their budget is up to €200k each, and they're looking for south county dublin, ideally not in the middle of nowhere.

My father has seen an apartment he likes in a development for over 55s only in Shankill; it's actually next door to a nursing home and is 'wired' into it with panic buttons (though is independent housing, not sheltered).

He reckons he can get the 2 bed apartment for 150k, which sounds like a great deal. Except the management fees come to almost €2,500 per year.

I'm wondering whether, in the long-term scheme of things, this is actually a good idea or not; he's not an "elderly" 63, but at the same time he has some health issues (both physical and mental) and I think he finds the thought of the close proximity to the nursing staff reassuring. On the other hand, his family line have a tendency to live LONG (my grandad lived to 86, my great auntie to 94) and I'm concerned about whether he / we will be able to afford management fees like that for the next 20 years.

I understand the emotional reasons why my father likes the idea of this place but am concerned about the financial costs, particularly if these management fees were to go up even further in the future. Theoretically, what would happen if they did so, and he was not in a position to afford to pay them? If my father was already 70+ or in more fragile health, I might see this as a better option, but given that he's still pretty much in the latter stages of middle-age...

Does anyone have any thoughts or opinions on this sort of housing as an option for 'younger' pensioners?

Lantus

do a spreadsheet detailing all your costs, incomings and outgoings and project it forward for the next 5, 10, 15, 20 years or so and see what it looks like.

only your father can decide what suits his needs best. Apartment living doesn't suit everyone. Might be good to rent for a while and see what he thinks?

I'd also visit the apartment, talk to the managment company and obtain its accounts of the CRO site to see how it has performed over the last few years.

He might never need the nursing home for 10 or more years. I cannot asses his health, only you and he can. It's a princley sum to pay for what is essentially a very expensive insurance policy. You can get panic buttons and personal alarms installed that do the same thing privatley for a fraction of the cost and you could install this in a house that doesn't have any annual service charge associated with it.

CamillaRhodes

Thanks very much for the reply, Lantus. Agree he needs to get his finances more in order, regardless of which housing option he goes with (he's a bit of a disaster in this respect, and it's not something he would share with me, so i'm having to speculate). He's certainly not well off, so we'd be looking at having to pay management fees out of the 'leftovers' from the sale of the family home and his pension, when he turns 65 - I know he has no savings.

Lantus wrote: »

talk to the managment company and obtain its accounts of the CRO site to see how it has performed over the last few years.

I don't know what "the CRO site" means, can you clarify? And is this common enough practice, i.e. would a management company provide their accounts on spec to a request from a random? I would understand them being obligated to provide such things if my father bought the place, but as at the moment he's just an interested party...?

Also, "to see how it has performed" - what would be considered strong or weak performance in today's market?

Gurgle

CamillaRhodes wrote: »

the management fees come to almost €2,500 per year

Sounds extortionate, what does this pay for?

CamillaRhodes

Gurgle wrote: »

Sounds extortionate, what does this pay for?

Not entirely sure Gurgle, I don't think it would pay for any actual healthcare from the nursing staff if you had to call them, but I guess the fact that it is wired in offers a lot of reassurance.

This is the property I'm talking about, btw (if I'm allowed to post here?)
http://www.myhome.ie/residential/brochure/21-maryland-house-shankill-co-dublin/1920610

This is the nursing home complex, which the apartments are part of. http://www.beechfieldnursinghomegroup.ie/apartments.html

My father has said (and it's a fair point) that though he's fine with apartment-living, would prefer it actually, he'd be concerned about living in an apartment development where you could have students or party animals or whatever living upstairs from you, so I guess you're paying for that peace of mind too...

Lantus

CamillaRhodes wrote: »

Not entirely sure Gurgle, I don't think it would pay for any actual healthcare from the nursing staff if you had to call them, but I guess the fact that it is wired in offers a lot of reassurance.

This is the property I'm talking about, btw (if I'm allowed to post here?)
http://www.myhome.ie/residential/brochure/21-maryland-house-shankill-co-dublin/1920610

This is the nursing home complex, which the apartments are part of. http://www.beechfieldnursinghomegroup.ie/apartments.html

My father has said (and it's a fair point) that though he's fine with apartment-living, would prefer it actually, he'd be concerned about living in an apartment development where you could have students or party animals or whatever living upstairs from you, so I guess you're paying for that peace of mind too...

electric storage heaters are typically considered to be awful and expensive. I lived in an apartment once with them, never again and I dont feel the cold. No control.

cro.ie you can search for the companies accounts. I would request a budget breakdown of the service charge prior to any offer to see where the money is going which you should request from the agent or seller directly.

You have pretty much indicated that he probably wont be easily able to afford it. Non payment can result in debt collectors being called in, going to court or services to the apartment being cut off at the management companies discretion or cars clamped until its paid. I'm not trying to put you off but you wont be able to say not this year thank you because electricity has gone up another 25% and I need the money to stay warm.

Using the excess money from the house sale to pay the service charge is IMHO silly. Basically he cannot afford it.

When he says he's fine with apartment living has he actually experienced it???? Until he does there is no gurantee he will be fine. It is a very different experience from house living.

I personally think you could make your money work much harder and not have to be saddled with such a high service charge. You can buy alarms with 24hr back up and auto diallers for hundreds not thousands and install them anywhere. Whcih means you can live just about anywhere and have piece of mind that loved ones are safe and someone is watching over them.

athtrasna

Also an approximate figure for management fees should be a red light to any potential buyer. It's pretty much saying "this is what they are now, they will go up but who knows how high"

Lantus

athtrasna wrote: »

Also an approximate figure for management fees should be a red light to any potential buyer. It's pretty much saying "this is what they are now, they will go up but who knows how high"

In a situation like this its not 100% clear that it is a typical managment service structure. Would the father become a shareholder or does the nursing home retain full control as its residents may be deemed not to be well enough to be able to vote and be involved as per a normal OMC? (not explained great but I hope you get the idea.)

The soliciter needs to investigate this fully but direct discussions with the company may bear fruit. You need to know what questions to ask though.......

If it is not a normal OMC and the charges are just put together by the company then I would be incredibly cautious. No accountability and no say and no protection under the MUD act.

This must be clarified. You really need to do a lot of investigation on this matter to get relevant answers and for that some educating yourself on these topics will be requied. The ODCE website has a superb guide to OMC's for free, the mud act is free on line. There are plenty of other groups and organisations that can offer some basic advice. Best of luck.

CamillaRhodes

Guys, and Lantus especially, thank you so much for the thoughtful and detailed advice. I'll bring all of this up with my father. TBH I think I'm already put off the place completely (regardless of the mgmt fees, you had me at "storage heaters" - hadn't noticed them!), the question is whether I can convince my father or not... (32 years of trying...!)