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.

Thanks to John from the Retirement Village Residents Association NSW chapter for directing me to a retirement village feature that aired on ABC NSW’s Stateline program. The program examined the recent changes made to retirement village legislation in NSW and highlighted the confusion around allocating expenditure between Repairs and Maintenance and Capital Expenditure, and who should be funding it.

The program also highlighted the problems currently being faced by Peter Gamble. Mr Gamble’s father was living in a retirement village until he passed away. Nearly two years later his father’s unit has yet to be sold and the occupancy contract obliges the estate to continue paying the village fees, which Mr Gamble says have cost him nearly $20,000 so far. There also appears to be a dispute over the sale price of the unit.

Lessons here:

1. Make sure your contract does not oblige you to continue paying fees for an unlimited time until your unit is sold – cap the time at three months.

2. Remove any clause in the contract which allows the village operator to set the sale price of your unit. At the very least this should be a matter of negotiation, at the best, you should be able to set the price.

3. Do not sign any contract that obliges you to use the village operator to sell your unit – you should be free to appoint whomever you want (although we do recommend using the on-site sales agents, as they are better-placed to sell than using an external agent).

4. Do not agree to pay a commission for the sale of your unit – this can be negotiated at the time of sale. Most villages do not charge commission however some do.

Click HERE to watch.