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Peter S.
Peter S.
Dundas, NSW
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Parents are thinking about buying into a retirement village and we would like to get some advice on the options and the contractual arrangements they need to be aware of. In one discussion it was mentioned they would lose up to 40% of the property when it came time to sell. Is this considered normal practice….. are there other options available?

5 years ago

Responses

Peter. Hello. I only have experience from my own Parents situation, where a daily accomodation fee existed for the first five years. Following this no further funds are deducted. You would need to check the contract if this equated to 40% of the entry price. Once the property is no longer required, it is returned to Retirement village at purchase price less the accumulated daily living allowance.
I recommend you take the contract to a local Solicitor for detailed advice on the contract to entered into.
If you need access to finance, I would be happy to chat.
Regards
Ken Olds
1300 ASK KEN

Hi Peter,
Yes this is quite normal for Retirement Villages.
There is specific legislation that says retirement villages aren't able to generate a profit from the daily or monthly fees they charge their residents. They can only charge fees that cover the costs of the services they offer (facility maintenance, cover staff wages etc.).
As a result they typically charge some type of exit fee, I have seen many that charge 3% p.a multiplied by the number of years of residence. Typically this caps out at 10 years i.e. 30% of the sale price of the retirement village unit.
You really need to look around at this and enquire on the exit fees.
Retirement communities on the other hand have an entirely different fee structure & often don't charge exit fees.
Once someone makes the decision to move into some type of retirement living you also really need to reassess what they are doing with their remaining assets and the impact on Centrelink (age pension benefits). Some retirement living facilities will qualify for extra Government assistance in the form of Rent Assistance.

There's lots to work through when considering a move to a retirement village.

Don't hesitate to reach out if you want to discuss any further.

Regards
James

Comments

Hi James, I'm very grateful for your advice and now understand a bit more about the process. I will share your feedback with the family, thank you

Regards

Peter

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