Are retirement apartments bad purchases?

Since founding Turners Oak I've been asked many times about the re-sale value of retirement apartments. I've had financial advisors whose clients are considering buying a retirement apartment ask for my advice; I've spoken to solicitors who are needing to sell a retirement apartment as part of probate ask me to value them on their behalf; and I've spoken to clients who have seen articles in the press and are worried about causing problems for their loved ones should they buy an apartment that then becomes a burden for said loved ones when they come to sell it.

This week there has been another example shared in The Guardian of one such burdensome sale. It took 6 years for AJ from Oxford to sell their father's retirement apartment, at less than half the price their dad had paid for it back in 2015. During the time it took to sell they had to cover the service charges of more than £4,000 per year as well as other costs.

The evidence

There are many examples of retirement apartments selling for less than they were originally purchased for and taking years to sell, all the while service charges and other costs still need to be paid. Research conducted for The Times in 2023 suggested that 75% lost value, with the average loss of value being 18%.

The most recent retirement apartment I valued for a solicitor for probate purposes was purchased for £495,000 in 2017. Last year I valued it at £370,000 - a loss of value of 25%, in line with the other apartments that had sold since they were first purchased.

In the example given in The Guardian, the developer states that the situation was unique, with Covid playing its part, and that "Over the last 18 months, our resales team have achieved an average resale value of 91% of the original purchase price, which, given wider housing market conditions, is expected." I find this statement intriguing; they appear to be saying that a 9% drop in value is expected based on the wider housing market.

I can only find one apartment within the development that has sold at 91% of its original value and that was sold in 2020. Currently there is an apartment showing as Sold Subject to Contract that was originally purchased for £270,500 in 2015 and was marketed for sale in August 2023 for £175,000. Then there was an apartment sold in November 2024 for £240,000 which was originally purchased for £364,535 in 2015 - a decrease in value of £124,535, or 34%.

I then compared this to the average price change of mainstream apartments in Oxfordshire during the same time. In January 2015 the average mainstream apartment was £189,430 and in November 2024 it was £240,710 - an increase of £51,280, or 27%.

So if you had purchased a retirement property you were likely to have lost a significant amount of its value, whereas if you had purchased a mainstream apartment you were likely to have gained a lot of value.

So are they bad purchases?

Whilst the drop in value of these apartments is stark, they are not always the case. I've seen retirement apartments that have increased in value and where they remain in high demand, often being snapped up within a few weeks of coming to the market. These tend to be apartments in smaller developments, sometimes managed by the residents themselves, and that sit well within the local community.

There is also the very important consideration of the non-monetary value of purchasing a retirement apartment which should always be, in my opinion, a primary consideration. If purchasing a retirement apartment is going to bring you or a loved one peace of mind, provide a community and socialisation, allow you to remain independent for longer, bring you closer to family, friends or amenities, and potentially make life easier and more enjoyable in any number of ways, then a potential future loss of value has to be weighed up against the intangible value we place on quality of life.

Furthermore many developers are aware of the concerns purchasers may have around resale value and are beginning to offer guaranteed resale prices and other solutions that may provide peace of mind. This is more so the case with Integrated Retirement Community developers whose developments are often more substantial with many additional facilities.

It's also worth considering whether you are buying a new apartment at a premium price or whether you are buying an apartment second hand which may have already had a drop in value.

Finally, remember that living in a home that allows you to thrive in your current and future chapters plays a huge part in your quality of life and wellbeing. Yes, the financial implications of certain decisions can be significant, but the quality of your life is just as important, if not more so.

---

I hope you've found this information useful. If you're thinking of purchasing a retirement apartment and would like some advice and information so that you can make an informed decision then please do get in touch.

Susan, Founder of Turners Oak