Are retirement homes a good investment? Risks and returns

A retirement home is usually better judged as a lifestyle purchase than as an investment. Most are leasehold flats, flats were the only property type to fall in price in the August 2026 UK House Price Index, and event fees and service charges can reduce what you or your family get back. Returns are less predictable than for ordinary housing. This is general information, not financial advice.

At a glance

• Age UK says some retirement properties lose value and can be hard to sell, and that leases may restrict who can buy.
• Event (exit) fees are typically 1% or 2% in many housing-with-support schemes, but can be 10% or 30% in newer schemes with extra facilities.
• Service charges are typically about £1,500 to £3,000 a year for a one-bedroom flat, and up to £10,000 a year in newer schemes with 24-hour staffing or on-site care.
• Ground rent is zero on newly created retirement leases from 1 April 2023.
• Event fees have not been banned; the government has said leaseholders will start to see disclosure changes during 2027.

What does “retirement home” mean as an investment?

This guide is about buying a retirement flat, bungalow or apartment, usually in an age-restricted scheme, either to live in or as a property asset. It is not about investing in care home businesses, shares or property funds, which are separate and need regulated financial advice. If you want a basic explanation of the product first, read our guide to what a retirement home is.

Age UK notes that most retirement housing is sold leasehold, though some freehold bungalows and houses exist. Buyers usually pay a service charge, may pay ground rent, and may owe a fee when the property is sold. These features separate retirement property from a conventional flat or house, and they are the main reasons returns are harder to predict.

How do prices behave?

There is no official index of retirement property prices that we could find, so be wary of any quoted resale return. The nearest official guide is the general market. In August 2026, the UK House Price Index put the average flat or maisonette at £194,148, down 1.6% on the year, while detached, semi-detached and terraced homes all rose.

Age UK says some retirement properties decline in value and can be hard to sell. Leases may also restrict resales, for example by requiring buyers to be over a certain age or requiring you to sell back to the landlord. A shortening lease also affects value: a 99-year lease becomes a 69-year lease after 30 years.

The Older People’s Housing Taskforce adds that average stays in assisted living are 6 to 8 years, and that someone buying a lease directly from the previous owner loses the Consumer Rights Act protections they would have buying from a developer or operator. Our guide to retirement property resales explains the process and common delays.

What costs reduce your return?

Event fees can also be triggered by events other than a sale, such as subletting or a new person moving in, including a partner, relative or carer. Our guides to deferred management fees and retirement home costs in the UK go into the numbers in more detail.

What have regulators and government found?

The issue is long-standing:

• The Competition and Markets Authority case list records four earlier consumer enforcement cases on hidden transfer or exit fees in leasehold retirement properties, all opened in 2009 and closed between 2012 and 2013 with undertakings or changes to business practices.
• Between 2009 and 2013 the Office of Fair Trading investigated transfer fees and, in its February 2013 report, found some lease terms potentially unfair. The Law Commission then reported on event fees in March 2017.
• The Law Commission found that event fees can be hidden in complex leases and disclosed too late. It recommended regulating them through an approved code of practice rather than abolishing them, because deferring payment can make specialist housing affordable.
• In March 2019 the government said it would implement the recommendations except for two issues it would examine further.
• In 2023 the CMA said event fees may be high and unpredictable, and that it wanted to review current practice before deciding on further action.
• In 2024 the Older People’s Housing Taskforce recommended implementing measures to protect consumers from hidden event fees as soon as possible.
• In its response to a consultation on leaseholder protections, the government said it would prescribe a bespoke annual report for leaseholders who pay a fixed service charge and an event fee, requiring landlords to disclose the nature of those fees. It said leaseholders will start to see changes during 2027.

The practical lesson is that rules are improving but have not yet removed the risks. Check what applies when you buy, not what is expected to apply later.

Can you let it out or leave it to family?

Do not assume you can. Age UK says leases can restrict who may buy, for example by age, and in extra care schemes may restrict selling or passing the property to relatives through a will. The Law Commission found that event fees can be charged on subletting. If you plan to buy to let, the age rules, the event fee on subletting and the extra stamp duty on additional properties may undercut any rental income. Our guide to retirement flats to rent explains how renting works for tenants.

The Taskforce reported in 2024 that around 20% of properties in new older people’s housing schemes over the previous three years were let rather than sold, which shows letting does happen, but each lease is different. A solicitor who knows retirement leases should read the document before you commit.

When might it make sense?

It can make sense when the purchase is mainly about the way you want to live: security, on-site staff, communal space and a smaller home. It can also work for people who value predictable costs, and who have read the lease. The ARCO Consumer Code, approved under the Chartered Trading Standards Institute’s scheme, applies to members’ schemes and requires pre-sale information on fees. Age UK warns that it covers only certain schemes, so check whether yours is covered.

Questions to ask before you buy:

• What is the event fee, how is it calculated and what worked examples can you see?
• What were service charges in each of the last three to five years?
• Does the lease restrict resale, letting or inheritance?
• How many homes in the scheme are currently for sale, and how long have they been on the market?
• Is there an ombudsman or tribunal route for complaints?

LEASE, the government-funded Leasehold Advisory Service, offers a free 15-minute telephone session on residential leasehold law for leases longer than 21 years. Compare buying with retirement villages and with renting before you decide.

Frequently asked questions

Do retirement flats keep their value?

Not reliably. Age UK says some retirement properties decline in value and can be hard to sell. In August 2026 the UK average for flats and maisonettes fell 1.6% over the year. Check recent sale prices for the specific scheme.

What is an event fee?

An event fee, also called a transfer, exit or departure fee, is charged when something specified in the lease happens, most often a sale or sublet. It is usually a percentage of the sale price, commonly 1% or 2% in many schemes and higher in some newer ones.

Are retirement home exit fees banned?

No. The Law Commission recommended regulating them rather than banning them, and the government has said changes, including a bespoke annual report for leaseholders, will start to appear during 2027. Read the lease before you buy.

Is renting a retirement property a better option?

It can be, if flexibility matters more than capital growth. Age UK notes that renting can make it easier to move if needs change. Renting avoids event fees and resale risk, but you do not build equity.

Can I get a mortgage or equity release on a retirement flat?

Availability depends on the lender, the lease length and the scheme, and we do not have an official source for typical terms. Speak to an independent adviser authorised by the Financial Conduct Authority, and see our guide to equity release for care.

Where to get help next

Read retirement flats for sale before viewing, and use the funding checker to see what support you may be entitled to if care needs arise. To compare local options, use Find care.

Sources

• Age UK: Buying retirement housing (factsheet 2)
• Law Commission: Event fees in retirement properties
• GOV.UK: Update on the CMA’s work in the housing sector
• GOV.UK: Government response to the strengthening leaseholder protections consultation
• GOV.UK: Older People’s Housing Taskforce report, Our Future Homes
• GOV.UK: UK House Price Index summary, August 2026

Reviewed by The Care Panel team on 9 November 2026. This guide is general information about care in England, not legal, medical or financial advice. Rules and rates change; check with your council or an adviser before making decisions.