Inheritance tax Budget reforms a boon to retirement apartment builders
Inheritance Tax reforms are a boon to retirement apartment builders, according to Churchill Retirement Living, which plans to double the amount of homes it builds in the next three years.
Churchill said the reforms in the Budget – which allow £1million properties to be passed down free of inheritance tax from 2020 – will be a ‘double whammy’ which will be positive for the sector with ‘older people downsizing while also giving capital to their grandchildren to help them get a foot on the ladder.’
Churchill will reveal a record set of full-year results today – more than doubling its pre-tax profit to £38million on revenues up 46 per cent to £131.1million for the year to June – as it expands to compete with larger rival McCarthy & Stone.
Building boon: The sector has benefited from the retirement of baby boomers and the rise in house prices
Chief executive Spencer McCarthy, who is son of the founder of its now major rival McCarthy & Stone, said the demand for retirement apartments is growing rapidly with the number of over-85s forecast to double by 2030 and demand to increase by 100,000 over the next five years.
But McCarthy also warned the growing demand for retirement homes could be a ‘ticking timebomb’.
It builds one and two bedroom retirement apartments that it sells on a leasehold basis to customers.
Churchill, which operates 40 sites, said over the last year a total of 3,000 retirement homes were built throughout the country across the sector which it warned is not enough and it has called on the Government to address the problem.
The sector has benefited from the retirement of baby boomers and the rapid rise in house prices.
Rival McCarthy & Stone is reviewing its options this year with expectations it will float on the London Stock Exchange.
But the retirement apartment sector has its detractors and it has been criticised for high service charge and management fees as well as part-exchange deals that could under value existing homes.