Regular readers of this blog, or perhaps those who have bought my book, would know that you typically occupy a unit in a retirement village in Australia through a ‘right to occupy’ contract, usually in the form of a loan/lease or loan/licence agreement. Sure, there are other types of occupancy agreements, such as Leasehold and Freehold, but the majority of occupancy contracts are loan/lease or loan/licence agreements.

So which contract is better – loan/lease or loan/licence?

Well to be completely honest, there isn’t a heck of a lot of difference between them.

Under both contracts, you make a ‘loan’ to the retirement village operator which is repaid back to you when you leave, minus, of course, all of the fees and charges that are applied when you exit. The loan is essentially the purchase price and is otherwise identified in your contract as the ‘ingoing contribution’. The loan or ingoing contribution amount is similar to what you would pay if you were buying a standard freehold-titled residential property of similar size and standard. It is structured as a loan basically so the village operator can pay less tax!

The lease or licence is the agreement under which you occupy your unit. You should enjoy the same quality of tenure under both types of contracts but remember, the purchase contract forms the basis of your occupancy in the village and you need to read and understand this document to know what you can and cannot do in your unit. You only have one chance to get this document right and that is BEFORE you sign it and move into the village. It is no use querying the fees and charges ten years later when you go to leave.

Common occupancy issues that you will want to check in your contract include:

• Can you have visitors stay with you and for how long?
• Can you have pets?
• Can you make changes to the inside or outside of your unit?
• Do you have a garden and can you plant whatever you want?
• Who repairs things like dishwashers and air conditioners?
• Who insurers what?
• What happens if you want to travel for an extended period?

I think it is also important to understand what happens when you leave – do you have to use the village sales agent or can you sell the unit yourself? Is there a commission or charges on sale?

It is likely that you will spend several hundreds of thousands of dollars on this purchase so it is definitely worth getting good, independent advice before you sign anything.

Busting the retirement village aged care myth

Many people who are considering buying a home in a retirement village want a community that has an aged care facility on-site, so that if they need higher care at a later date they can simply move a few doors down into the nursing wing.

This assumption about care is a common misconception among people considering retirement villages and I’ll tell you why…

Firstly, 95% of the Australian population aged over 65 years choose to age in their own homes and the bulk of the care industry is set up to cater to this market. There are any number of care services that can be brought into your home to help you stay there as long as possible, so unless you need constant care or supervision you can stay in your own home. The same applies to retirement villages – if you need care you can arrange this with an external provider and have the care brought into your home in the retirement village (this typically applies whether the village provides care or not). This means you don’t have to find a retirement village that has an aged care facility on site.

Secondly, many people assume that if they live in a retirement village that provides aged care, once they need the aged care they simply move into the aged care facility. Not so. Retirement village operators that offer aged care typically only do so in a limited way, because they make their money from the sale of independent living units, not running aged care beds. Therefore the ratio of aged care beds to independent living units in a retirement village is low. There is no guarantee that when you need higher care that a bed in the on-site facility will be available for you.

Finally, the move from your independent living unit into the on-site aged care facility, whether it is within the same retirement village or not, typically requires you as the resident to execute a sale of your independent living unit and the purchase of a bond to move into the aged care facility. The nature of retirement village purchase contracts position the bulk of the fees and charges associated with your retirement village lifestyle into the exit and resale of your unit. The high fees that can sometimes be charged mean that you may not have enough money remaining to fund your entry into the on-site aged care facility.

So unless you need a level of care right now, or have a debilitating illness that destines you to requiring care in the medium term, I think there is no need to restrict your retirement village search to only those facilities that provide aged care.

PS. If you do need aged care, make sure you check out my post on supported living HERE. Also, check out Rachel Lane & Noel Whittaker’s new book Aged Care, Who Cares? to help you navigate the complexities of Australia’s aged care system.

What is an over 55′s retirement village ? Is it actually a retirement village?

OK, well lets get the technical legal terms out of the way first: A retirement village is technically whatever is described as a retirement village in your particular state or territory retirement villages act. Typically, it describes a retirement village as a community of older people (usually with a prescribed minimum age limit of 60 or 65) that occupy homes under a retirement village ‘scheme’, whereby they pay an in-going contribution and an exit or departure fee.

To call itself a ‘retirement village’, a retirement community has to be registered under the state or territory retirement villages act, and comply with that act.

Over 50′s or over 55′s villages are completely different.

These communities come under your state or territory’s demountable homes or caravan parks act. This is because the nature of your occupancy is more in line with caravan parks than retirement villages, in that you own the house and lease the plot of land that the building sits on. So you only pay for the house and you lease the plot of land from the community operator. Age restrictions are not part of the legislation, but may be enforced under the local council’s development approval from the village or the retirement community’s by-laws.

In theory, if you wanted to leave the village you are quite within your rights to lift up the home (as you would a caravan) and take it to another site. However in practice, the homes are there to stay and cannot really be moved. Many of the original over 55′s villages were demountable-type homes which could be relatively easily moved, although the new over 55′s villages today are proper brick and tile on slab buildings no different to a standard suburban home.

Other features of over 55′s villages include:

• They are targeted to a younger demographic than your standard retirement village, which may have a qualifying age limit of 60 or 65.
• You own the house outright and lease the plot of land – in retirement villages you occupy your residence under a lease or licence, or occasionally under a freehold arrangement.
• You pay a regular fee (ie, weekly or monthly) that is similar to a body corporate or owners corporation fee and covers off the maintenance of the grounds and common areas, security, insurance, etc, as well as a component of rent for the land.
• The rental or lease component for the plot of land your house sits on may attract the government rental allowance, if you qualify.
• Most over 55′s villages don’t apply departure fees or take a share of any capital gain when you leave.
• Because the facility is aimed at a younger demographic there are usually no care services provided on site. However there is nothing to stop you from bringing in any care or other services you need from an external provider, the same as you would if you were living in your own home.
• They should be a cheaper accommodation option because there is no land component in the purchase price.

Some things you need to be aware of  however:

• Make sure that your lease term on the land extends for a decent length of time – at least as long as you will be living there. 40+ years should be adequate.
• Make sure your lease agreement does not allow the operator to terminate your lease agreement for any reason that you think is unreasonable, such as if the village operator goes broke or sells the village.
• Make sure that your lease agreement does not allow the operator to arbitrarily raise the lease fee amount.
• Find out who pays the rates – is this included in your weekly fee or not?

I am a big fan of the over 55′s villages if they don’t apply exit fees, as they will provide the retiree with a good financial outcome when they exit, unlike retirement villages, which can decimate your savings

It is always important to good advice on any purchase of significance and retirement villages are no different. Give us a call if you have any questions on 1300 425 442.

Queensland has around 190 registered retirement villages, with many of these located around Brisbane and the southeast corner of Queensland, including the Gold and Sunshine Coasts. The region is popular with retirees due to its pleasant climate, beaches and easy access to quality hospitals and health care. Many of the villages located near the Brisbane CBD are older villages, built around 30 years ago. The newer villages are located in suburban fringe locations where retirement village developers have been able to access large plots of land.

When considering where to live in Brisbane, the first decision you need to make is “which side” of Brisbane to live in. This could be the north side, as far up as Bribie Island or Caboolture, east in the Redlands region, south, as far as Logan, or west, out as far as Ipswich.

Understandably, the closer to the Brisbane CBD you want to live, the more expensive it is. For example, a two bedroom apartment close to the CBD may be $400-$500k, whereas a similar standard of apartment may be accessed for around $250k in the more regional locations.

Living in a retirement community can be a great lifestyle choice for retirees. Unfortunately, the process of buying a home in a retirement village is complex and confusing, with many hidden traps and charges awaiting the unwary buyer. It is important that you get good, independent advice and don’t just rely on what the village sales agents are telling you. Find My Retirement Home is a Brisbane-based independent advisor and buyer’s agent specialising in retirement homes. You can give us a call on 1300 425 442.

Retirement villages in Queensland are administered by the Department of Fair Trading.

There are five ways that retirees are able to own or occupy a retirement home in Brisbane. You can learn about the five different ways HERE.

One of the most difficult issues for the buyers of retirement homes to understand is that of Exit Fees, also known as departure fees or deferred management fees. You can learn more about Exit Fees on my video tutorial HERE.

If you would like to conduct an online search for the retirement villages available in and around Brisbane, please go HERE.

In Victoria, a retirement village is defined under the legislation as a community where most of the residents are aged 55 or over, have retired from full-time work and upon entering the village, paid a lump sum (called an ingoing contribution) that was not rent. There are around 400 retirement communities in Victoria.

Living in a retirement community can be a great lifestyle choice for retirees. Unfortunately, the process of buying a home in a retirement village is complex and confusing, with many hidden traps and charges awaiting the unwary buyer. It is important that you get good, independent advice and don’t just rely on what the village sales agents are telling you.

Retirement villages in Victoria are administered by Consumer Affairs Victoria.

There are five ways that retirees are able to own or occupy a retirement home in VIC. You can learn about the five different ways HERE.

One of the most difficult issues for the buyers of retirement homes to understand is that of Exit Fees, also known as departure fees or deferred management fees. You can learn more about Exit Fees on my video tutorial HERE.

If you would like to conduct an online search for the retirement villages available in Victoria, please go HERE.

In NSW, a retirement village is defined as any residential complex predominantly occupied by retired persons aged over 55 years. These residents have entered into some form of contractual arrangement with the owner or operator of the village, usually in the form of a loan/lease or loan/licence agreement.

According to the NSW Dept. of Fair Trading, there are approximately 591 retirement villages across NSW, accommodating more than 36,000 residents.

Living in a retirement community is a great lifestyle choice for retirees. Unfortunately, the process of buying a home in a retirement village is complex and confusing, with many hidden traps and charges awaiting the unwary buyer. It is important that you get good, independent advice and don’t just rely on what the village sales agents are telling you.

There are five ways that retirees are able to own or occupy a retirement home in NSW. You can learn about the five different ways HERE.

One of the most difficult issues for the buyers of retirement homes to understand is that of Departure Fees, also known as exit fees or deferred management fees. You can learn more about Departure Fees on my video tutorial HERE.

If you would like to conduct an online search for the retirement villages available in NSW, please go HERE.