Moving into a Retirement Village
Moving into a Retirement Village
If you are approaching retirement, or you are an 'empty-nester' left rattling around in a big family home, you may find yourself wanting to downsize or thinking about moving into a retirement village.
For many people, the sight of a lengthy and seemingly complicated retirement village contract is enough to scare them away! However, with the right legal advice and an objective, well-considered approach, moving into a retirement village can be one of the best decisions you will ever make.
How to Approach the Purchase
Buying into a retirement village is generally more complicated than purchasing a standard property because of the additional considerations involved. These include:
• The type of ownership
Retirement villages can vary in terms of ownership models they use. For example, some offer outright ownership which gives the unit owner a title over the unit, some have a loan licence model, where the bulk of the ingoing contribution is set up as a loan to a village operator in return for a licence to occupy the unit, and some operate on a leasehold or sublease model. It is critical that you fully understand the type of ownership model used in a village before you sign any contracts - an experienced lawyer will be able to explain the pros and cons of each model.
• Ongoing costs
You need to make sure that you are fully aware of any on-going costs involved after the purchase, such as management fees for the provision of additional services, building and maintenance levies and administration costs. Each village can be different so you also need to make sure you understand your obligations in terms of council rates, utilities and strata levies.
• Departure fees
A retirement village contract should also outline any fees and obligations associated with departure from the village. It is the 'departure' or 'exit' fees that generally cause people the most concern and you need to ensure that you are fully aware of your obligations BEFORE purchasing the property. The calculation of exit fees is commonly a percentage of the property's value paid per year of residency and usually capped somewhere between 30% and 40% of total value.
The key to making a successful move into a retirement village is always to obtain independent legal advice prior to making a purchase so that you are entering into the contract with your eyes wide open and fully understand your responsibilities and obligations.
The benefits that a retirement village can provide, including better security, an enhanced sense of community, social interaction and friendships, are also very important. Speaking to one of CDQ's experienced property lawyers about your retirement village contract, and ensuring you have all of the relevant information, can provide peace of mind when you most need it.
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