PLEASE NOTE: This article was published on the date listed below and may now contain information that has since been updated or changed. We have retained this article as it may still contain helpful comments. However, we advise you to make an appointment to see us for the most up to date information on this topic.
The Retirement Villages Act 2003 has come into force to provide structure and certainty in an industry where standards have varied considerably. Currently, there are over 300 villages accommodating more than 4% of people aged over 65 years. The Act now defines what constitutes a “retirement village”, requires registration of such villages with the Registrar of Retirement Villages and sets out dispute resolution and penalty provisions.
What to expect with a Retirement Village
With most villages:
- You don’t buy the unit – you purchase a “Licence to Occupy” the unit on terms set out in that licence;
- You pay a purchase price comprising your deposit which is normally 80% of the total purchase, and the balance of 20% being, in some cases, called a “facilities fee” to cover the village capital costs. This fee normally amortises at the rate of 5 to 10% every six months, so that in ten years or less your facilities fee is used up. If at the end of that period you decide you want to surrender your unit, you will receive back your initial deposit less a “refurbishment fee” which most villages charge on surrender of your Licence to Occupy so that in the event they have to redecorate your dwelling, those costs will be borne by you. In some cases you may receive an additional payment if the unit has gone up in value. Some villages don’t charge a facilities fee, but be careful that other charges are not set higher to compensate;
- The Licence to Occupy gives you the exclusive right to occupy your unit provided that you adhere to the village rules and pay the fortnightly/ monthly levies;
- You are required to pay village levies to meet the ongoing costs of the village, which include building insurance, rates, maintenance on the buildings and grounds, and village administrative expenses (you will be personally responsible for your own contents insurance, power and telephone expenses).
Other issues to carefully consider
In addition to the legal/ practical issues listed above, there are some other factors for you to consider:
- The range of village activities and services;
- Does it offer the type of companionship you are seeking?
- A secure environment is a high priority in retirement villages;
- The village rules can be constraining for some people – are you prepared to adhere to the village rules?
Village life can be great for many but the community environment is not for everyone. It is a good idea for those who seek an independent lifestyle whilst wishing to forget about security issues, doing the gardening and maintaining the premises. This is a lifestyle choice, but should not be seen as an investment.
Contact us at the earliest stage of your deliberations as it is essential that you understand your legal rights and obligations before signing anything.