Richard Williams

While the Retirement Villages Act 2003 provides some protection (and guidance) for residents of retirement villages, it is always a good idea to get expert advice before making any decisions. Here at Billings Lawyers, we can help translate the sometimes confusing documents (such as the Occupation Rights Agreement which contains the conditions of your ‘purchase’) and make the whole process easier for you to understand.

Retirement Villages are not all created equal. Two of the more complex matters that you will need to understand (and which vary between villages) are:

  • The legal ownership structure; and
  • The true cost of your purchase (including entry fees, exit fees and ongoing charges).

Legal Ownership Structure

You need to be aware of exactly what you are buying and the legal title that you will purchase when you acquire your new home.  The most common types of legal title used for retirement villages are:

  • Licence to Occupy: Entitles you to live in a unit, but ownership of the unit is retained by the retirement village. 
  • Unit Title:   Confers legal ownership of the unit or house upon the resident. 
  • Cross Lease: Ownership of the freehold is shared by all of the residents who then grant leases to each other to live in the units and/or houses.

True Cost of Purchase

Weekly/Monthly Fee:  Some village operators guarantee that the base weekly/monthly fee will never increase during the duration of your stay. Some village operators on the other hand will increase the fee inline with the proportion by which National Super or the Consumer Price Index increases from time to time.

Consider when the weekly/monthly fee stops when you vacate your townhouse or apartment.  Does it stop immediately; at end of 6 months from the day you vacate; or does it continue until the townhouse or apartment is sold to a new resident?

Management and maintenance fees:   Most retirement villages provide for management and maintenance fees to be deducted as a one off payment from the licence fee paid to the village.  This usually occurs during the first 3 to 5 years of the licence term and will vary between 20% and 30% of the full licence fee.   However, the timing and amount of such deductions will vary between villages.

Some village operators may require you to pay management and maintenance fees each time you transfer to another townhouse or apartment, rather than just the once.

Purchasing a unit in a retirement village is never an investment; it is a lifestyle choice. Because retirement villages charge the occupier a deferred maintenance fee, you will almost always receive less than the initial purchase price when occupation ceases.

Costs on sale

While your unit is being marketed, you must continue to pay outgoings. Many village operators require you to pay an administration fee on sale. This can range from hundreds to thousands of dollars.

Wills and Enduring Powers of Attorney

It will be a requirement that you have current Enduring Powers of Attorney and a valid Will in place as a condition of entrance to the Village.

If you or someone you know is thinking about moving into a retirement village and you want some further information, get in touch.

Richard