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28 Jun 2019 | 07:08

McCarthy & Stone welcomes ground rent exemption for retirement homes

Retirement home developer McCarthy & Stone welcomed news that the UK government had exempted the retirement community sector from a regulatory rent cap.

Britain's Ministry of Housing, Communities and Local Government on Friday published a response to consultation held in October on ground rents.

McCarthy & Stone noted that retirement home developer would be given an exemption and permitted to charge an economic ground rent after they are reduced to zero elsewhere.

'The ministry continues to recognise the unique way the sector uses ground rents to recover much of the construction costs of the significant shared areas that are integral to retirement living and which deliver direct benefit to customers,' the company said.

Chief executive John Tonkiss said shared areas in its developments were a key to bringing retirees together and include communal lounges, restaurants and well-being suites.

'However, these spaces cost between £1m and £2m per development to build,' he said.

'Consequently, we require an additional funding stream to cover this cost and ensure our apartments remain affordable for our customers.'

'We therefore fully support today's announcement from the government to exempt ground rents in retirement communities as it ensures these shared areas remain viable to provide.'

'It also means the customer is in full control of how they pay for these costs, by choosing to pay either an economic ground rent or a higher purchase price.'

'This option is aligned to our new strategy of providing greater customer choice.'

Tonkiss said the company would continue to discuss the detail of the exemption with Government over the coming months.

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