Ongoing service charges after death and during probate
A recent article from the BBC (link to: https://www.bbc.co.uk/news/articles/ckgykp79ezyo) highlights several cases where families are left struggling to pay high ground rents and services charges on properties they cannot sell.
One person said despite dropping the asking price of his late mother’s retirement flat for £55,000 less than what he paid for it, it’s still not selling and he is left paying the annual service charge of £9,700, ground rent of £435 and council tax of £1,044.
Owning a retirement property raises distinct issues that challenge the assumption that home ownership in later life will necessarily benefit an estate.
Why do retirement properties need to be considered carefully when estate planning?
Retirement properties are usually age restricted – i.e. you must be over a certain age, usually 60, to live there. That’s why many people inheriting these properties are finding themselves stuck.
What’s more, there is high supply and low demand for these types of properties. The BBC article mentions Taylor who inherited his mother’s McCarthy and Stone retirement property in Corbett Court in 2024. At the time, it was one of at least 18 other flats in the block of 56 that were also empty and, on the market, with the same lease restriction. Taylor points out that four miles away McCarthy Stone is building a new development for the over 60s, despite Corbett Court being 30% empty.
What is commonly presented as a secure, low-maintenance housing option can, on death, become a complex and potentially costly liability for both estates and executors.
The sale of property is often essential rather than discretionary
It’s bad enough inheriting a home that is difficult to sell and paying the constantly-mounting sums for the privilege. However, many people have got into real difficulty when it’s necessary to sell the property when the proceeds are needed to settle care fees or pay other outstanding debts and liabilities – even to help fund a funeral.
Where a retirement flat cannot be sold within a reasonable timeframe, executors may find themselves unable to meet these obligations, while charges continue to accrue against the estate.
Executors should be advised that failure to pay service charges and other ongoing liabilities may expose them to personal liability, particularly where managing agents or freeholders take enforcement action during probate.
This risk is often underestimated, especially by lay executors. In estates with limited cash, executors may feel pressured to fund charges personally to protect the estate, a position that carries obvious risk and should be carefully managed.
How retirement flats can erode estate value before distribution
The cumulative effect of ongoing charges can be severe. Estate value may be significantly reduced before any beneficiary receives a distribution and, in some cases, the total liabilities may approach or exceed the eventual sale price.
Wills, lasting powers of attorney and broader estate planning should consider the potential difficulty of resale, the financial burden on the estate post-death and the possibility that the property will need to be sold quickly to fund care or liabilities.
If you would like some further information or advice, contact Downs Solicitors to see how we can help.
Contact Lucy Whittam
