Platinum Skies: £63,000 loss on £130,000 shared ownership retirement flat after new owner died 25 days after moving in

LKP wins reprieve for family as Platinum Skies makes £32,437.24 ‘gesture of goodwill’ to reduce the fees

Executive chairman Julian Shaffer references ‘truly exceptional’ case of pensioner’s death at the start of Covid lockdown in April 2020 and the market disruption that followed

Exit and other fees are reduced ‘as a compassionate gesture of goodwill given the particular and exceptional circumstances of this matter’

Platinum Skies acts ‘strictly in line with prevailing regulation for shared ownership properties’

Platinum Skies responds in detail to concerns raised by LKP

Donavon Hanney only enjoyed living at his one-bedroom Platinum Skies retirement flat for 25 days before dying – but given the £63,000 cost to his family it would have been a bargain had he stayed at the Dorchester hotel instead.

The amount added up to more than half the resale value of his 50% shared ownership flat, which sold for £105,000. By comparison a “Deluxe King Room” at the Dorchester comes in at £41,180 for the same number of days.

And it could have been worse: Platinum Skies, in fact, waived the 2% estate estate agency fees to which it was entitled and charged on the entirety of the property, amounting to a further £4,200.

LKP raised the case in May this year with executive chairman Julian Shaffer, who decided that Platinum Skies would return £32,437.24 to Mr Hanney’s two daughters, Sally-Ann Hanney, 46, and Amy Davies, 44.

Although “correct procedures were followed”, Mr Shaffer said:

“After carefully reviewing matters, I have concluded that Mr Hanney’s case is truly exceptional, owing to the sadly very short time he spent at Chapters [the Platinum Skies site in Salisbury] and the unfortunate timing of his passing coinciding with the unprecedented lockdown and market disruption.”

As a result, Mr Shaffer made the Hanney family “a compassionate offer to ‘turn back the clock’ in respect of the charges that have been incurred against the property to just one year”. The charges had been applied from when Mr Hanney moved in at the end of March 2020 to May 2023.

The case shows the astonishing costs that can rack up in retirement shared ownership leasehold contracts.

Mr Hanney, 84, a retired family butcher, bought his 50% shared ownership flat at Chapters for £130,000 – full price £260,000 – on 24 March 2020 just as the Covid pandemic arrived, but then died of a stroke on 18 April. Just over three years later the property sold on 5 May 2023 for £210,00: a fall of 19.2%.

His two daughters had been struggling to sell the property for more than three years and finally achieved a sale at £105,000 for their family’s 50% share.

That was a £25,000 loss from new, and comes on top of unpaid ground rents (£500 a year), rental bills, service charges, a £16,800 “event fee” and other charges to Platinum Skies that amounted to £38,299 (see box).

The expense mortified the sisters, whose story was told in The Times earlier this month:

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“I have three children and my sister has two,” said Amy, a civil servant based in Brussels. “Our father worked hard all his life – so did our mother, a nurse – and they would have wanted this money to have gone to their grand-children.

“Platinum Skies has levied outrageous fees and I believe its business practices are an absolute scandal. My advice to any potential purchaser is to stay well clear.”

Platinum Skies rejects this view. Mr Shaffer’s statement to LKP reads:

“Having carefully reviewed the matter, I can confirm that the correct procedures were followed by my colleagues in the Platinum Skies sales team in calculating those costs. This is in line with the agreed
contractual terms and governed by the prevailing regulations for shared ownership properties that are set out by Homes England and other relevant authorities.”

Indeed, Homes England gave Platinum Skies, owned by the Affordable Housing and Healthcare Group, £5.1 million to build the Chapters site to encourage shared ownership: the quango’s logo appears on all Platinum Skies publicity material, and even in the emails of its sales staff.

The largest bill on the flat sale was £16,800 for “event fees”, which were calculated at 2% of the full £210,000 resale price for each year of ownership up to a maximum of 10%.

LKP was concerned that event fees were not prominent on the Platinum Skies website in May this year. When the Law Commission investigated these fees in 2016 it urged that they should be prominently declared.

The cost of 25 days with Platinum Skies
£25,000 loss on resale of the original £130,000, 50% share of the flat
£16,800 event fees of 2% a year (four in total, 8%) of the full resale price of the flat (£210,000)
£12,768 in rent arrears for the unpurchased 50%
£4,806 in service charges arrears under the lease
£1,620 Platinum Sky charges on sale (inc VAT)
£1,500 Ground rent (£500pa)
£500 Platinum Skies retention charge (unspecified)
TOTAL £62,994

Some amendment to the Platinum Skies website has been made and event fee information can be found her: “What is the Deferred Event Fee and when do I pay it?”

https://platinumskies.co.uk/buying-with-us/shared-ownership/

Platinum Skies told LKP that “Fees incurred are made fully transparent throughout the sales process and each prospective customer is provided with a schedule of how fees increase over time before they purchase a property.”

Event fees are justified in retirement sites that have long-term management as a means to pay for the communal facilities, such as the lounge, restaurant and coffee bar at Chapters.

The Association of Retirement Community Operators (ARCO) insists that member organisations must make event fees clear and overt to potential customers at the earliest stage.

Last year Platinum Skies had to address all its shared ownership retirement leases which made “stair-casing” – the purchase of the unowned portion – impossible. The company inserted the condition that shared owners could only staircase by a maximum of 10% at a time and had to pay a 5% full market value fee every time.

This draconian term, which is against Homes England guidance, was reported in The Times newspaper and Platinum Skies subsequently agreed that the charges it had imposed would not be enforced. Platinum Skies told LKP that these stair-casing provisions have never been enforced.

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Although the Hanney’s flat fell 19.2% in value and took more than three years to sell, Platinum Skies strongly denied that it did not actively market the property, and dismissed the Hanney family’s suggestion that delay created financial gain by triggering further 2% event fees.

In any case, this would not be consistent with Platinum Skies choosing to waive the 2% estate agency fee to which it was contractually entitled.

Initially, the Hanney’s flat was offered for sale by an outside estate agent, but the sisters subsequently instructed Platinum Skies to sell it.

For months it languished on the market, and in October 2022 the sisters asked a family friend Jessica Sims, 44, to visit the Chapters site as a “secret shopper” and ask to view Mr Hanney’s flat.

“The sales staff tried to push me to the new flats, not the resales,” Ms Sims told LKP. “They told me I would get £10,000 legal and moving fee incentives if I bought new. Most of all they highlighted the reassurance that Platinum Skies had first option to buy the new flats back, and that I should not worry.”

“Eventually I managed to view the flat, but I came away utterly unimpressed. They seemed to me to be time-share operators.”

However, the Platinum Skies resale team did in fact find a buyer in November 2022 after 11 months.

Mr Shaffer told LKP: “The sale, however, was dependent on the buyer gaining probate, causing a 6-month delay. The family acknowledged and agreed in writing to this delay and Platinum Skies was able to agree the sale in March 2023. The sale duly completed on 5 May 2023 – much quicker than the industry standard for re-sale properties. Accordingly, the sale took place quickly in the context of and despite the considerable disruption to the property market last year, amid wider economic difficulties.”

Regarding the condition in the lease that Platinum Skies has the option to re-purchase a shared ownership property, Mr Shaffer told LKP:

“To date, Platinum Skies has not exercised this option for any property at Chapters, however as this is only an option there is no obligation for Platinum Skies to do so.”

Even though the flat was empty for more than three years, the rents for the 50% of the unowned flat increased amounting to a bill to the estate of £12,768.

After the first month’s rent paid by Mr Hanney in March 2020, Platinum Skies did not ask the family to make further payments until the flat was sold.

It is a controversial feature of shared ownership that rents can only go up under the lease.

However, while the National Housing Federation representing housing associations capped rent increases for shared ownership properties in 2023/24 at 7%: “Platinum Skies applied a rent cap of 6%, below the sector commitment, to help our residents through high levels of inflation and the cost of living crisis. This was implemented by way of legal side letter before the rent cap was mandated by the Government.”

It is an anomaly of shared ownership that sales are not recorded on the Land Registry and therefore there is no public data on the prices paid for these properties on resale. LKP argues that this is hugely disempowering for consumers.

LKP indicated other resale properties that had been sold initially for higher sums.

“There are properties that have sold for more than they were originally bought,” Mr Shaffer told LKP.

Although Platinum Skies received millions from taxpayers via Homes England for its housing projects, a core aspect of the business is to sell the rental incomes and the event fees to outside investors as a regular and legally enforceable income stream.

These are an alternative to ground rents, which were banned in retirement housing on 1 April under the Leasehold Reform (Ground Rents) Act 2022.

LKP asked: “It is claimed that Platinum Skies / the Affordable Housing and Healthcare Group is running a sales process for income streams relating to its retirement housing portfolio. Can you confirm whether freeholds, rental income streams or event fee income streams relating to the Salisbury development are also being offered for sale to external investors?”

Platinum Skies responded: “This is correct and is legitimate and key industry practice, which funds the delivery of much-needed affordable homes across the country.”

LKP added: If so, is Homes England aware that you are in the process of selling a financial interest in homes that have received funding from Homes England?

Platinum Skies responded: “Platinum Skies operates in line with prevailing regulation for shared ownership properties. We strongly reject any allegation that this is not the case.”

Donavon Hanney’s lease from Platinum Skies can be seen here

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Platinum Skies full response to the concerns raised by LKP can be read here:

https://www.leaseholdknowledge.com/wp-content/uploads/2023/10/AHH-Sebastian-OKelly-Updated-25.5.23-1.pdf