It is important that you understand the legal nature of any retirement village you wish to enter. Some villages offer freehold Torrens Title properties. Some village accommodation is Strata Title operating very much like a normal home unit development with an Owners Corporation raising quarterly levies for a sinking fund, administrative fund and sometimes special levies. Some retirement villages operate on the basis that you are purchasing a long term lease or licence to occupy the premises. In all cases stamp duty will be payable on the documentation.
Retirement villages vary greatly in their accommodation and facilities. Some villages provide the full variety of homes such as single room apartments, 1, 2 and 3 bedroom home units, townhouse style units and villas and some have freestanding cottages. Many retirement villages offer high levels of services including fully serviced hostel type accommodation for the frail. Most retirement villages include shared facilities such as recreation rooms, dining halls, consulting rooms for visiting professionals, a bus for taking residents to local shopping centres, libraries, craft rooms, sporting facilities and the like.
When considering entering a retirement village you must clearly determine the amounts payable on entry, ongoing costs as well as the style of accommodation you will need, levels of care you will require and the lifestyle features such as leisure facilities and the like. Generally retirement villages are occupied by retired persons, generally on fixed incomes, who must very carefully consider their budget.
A person acquiring a retirement village unit must be very clear on the initial entry price, purchase price or "ingoing contribution". They must also be sure that they will be able to pay any rent or recurring charges. The documentation of most villages includes reference to payment of a departure fee, exit fee or deferred management fee. These amounts may exceed 25% of the payment you might be expecting to receive when leaving the retirement village. It is often important that you are very clear on these costs as they may impact on your estate planning decisions.
Generally, no matter what type of legal documentation is involved, you or your estate may not be entitled to a refund and recurrent charges may not stop until a new resident has been found to take your place.
Many retirement villages will require that you be examined by a doctor of their choosing prior to you entering the village. If you are too frail the village may decide that you require a higher level of service than they have to offer. Not all retirement villages offer high levels of service and accordingly some reserve the right to terminate your right to occupy the village if they deem that you require the higher levels of service due to medical problems or infirmity.
You must understand your responsibility for maintenance, repairs, council rates and water rates, electricity, telephone and gas. Often on termination of residency at a retirement village the resident is responsibility for the cost of refurbishing the unit. Village management often requires a share of any capital gain made by the resident but we are unaware of any village prepared to share capital losses.
It would be a mistake for you to compare the cost of a retirement village property with a comparable property that is not part of a retirement village unless you consider the relevant restrictions, extra fees, ongoing charges, deferred management fees and the like. Retirement villages can vary enormously in price and ongoing costs and at the end of the day you will always need money to live on. Hence careful budgeting and future planning is essential.
For most people the move to a retirement village involves a certain element of risk if they have not experienced living in close proximity to their neighbours, sharing common facilities and being bound by village rules. You must keep in mind if you are downsizing your accommodation you will need to dispose of a considerable amount of your personal property and furniture. You may not be able to have pets in the particular retirement village.
On the one hand you may be relieved of many responsibilities involving maintenance of your accommodation however on the other hand you will be taking on different liabilities and obligations to the village and your neighbours.