28th Jun 2019 10:54
(Alliance News) - McCarthy & Stone PLC said Friday the UK Ministry of Housing, Communities & Local Government confirmed the retirement sector will be allowed to continue charging ground rents even as they are capped elsewhere.
The ministry posted its decision in a response to its consultation on ground rents launched in October, saying it recognised the way that the retirement community sector used ground rents to recover most of the construction costs of shared areas that are integral to retirement living.
McCarthy & Stone, a retirement-focused housebuilder, will continue to discuss details of the exemption with the government over the next few months. The company stressed that this announcement will have no effect on its current financial year but will reduce the need to take mitigating action in the future.
"Retirement communities make a real difference to the lives of our customers by bringing older people together, addressing loneliness and improving their overall wellbeing. The shared areas in our developments are the key to providing these benefits, and include communal lounges, restaurants and well-being suites," said Chief Executive Officer John Tonkiss.
However, these spaces cost between GBP1 million and GBP2 million per development to build. 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," Tonkiss added.
Shares in McCarthy & Stone were up 2.7% at 138.10 pence on Friday.
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