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What
is a Retirement Village?
A
retirement village is essentially a community for seniors.
The term is something of a misnomer because you don't necessarily
have to be retired at all. Entry is generally restricted to
people who have attained 55 years of age or have retired from full-time
employment, and their spouses. The average age is somewhere
in the low to mid 70's and the average entry age is somewhere in
the mid to high 60's.
Retirement
villages offer an accommodation and lifestyle alternative that may
suit many people. If you have spent some time trying to understand
the available alternatives, you will know that they are not simple.
Laws and regulations vary from state to state. There are at least
8 different legal structures and well over a dozen different departure
fee structures. The legal contracts may be complex and they
vary significantly from village to village.
This means that
moving to a retirement village may not be as simple as you had hoped.
It also means that the financial implications of moving to a retirement
village can be complicated and making sensible comparisons between
retirement villages with varying legal structures and departure
fee structures can be difficult.
Types of Retirement Villages
There
are basically two kinds of retirement village: resident funded and
donor funded. The latter are invariably owned and operated
by so called "not for profit" organizations. They include
an element of charitable subsidy and entry is generally restricted
to the needy. The former may be owned and operated by the
private sector or by "not for profit" organizations and they are
conducted on a commercial basis to produce a profit or "surplus",
respectively. Sometimes it's hard to tell the difference between
a profit and a "surplus".
Accommodation and Facilities
The
size and style of retirement village accommodation varies enormously,
from bed-sitter apartments to spacious brick and tile homes.
Most retirement villages have common areas and a range of facilities
available for the use and enjoyment of all residents.
Levels of Care
A
number of terms are used to describe the level of care that is provided
in a particular village or in relation to particular units.
Units that are described as "independent living units" or "self-care
units" provide the lowest level of care, although a range
of personal services may be available on request on a user pays
basis under an arrangement known as "flexicare".
Units that are described as "assisted living units" or "serviced
apartments" provide the highest level of care, usually including
the regular provision of a range of personal services.
Confusion sometimes arises because low level residential care facilities,
previously known and often still referred to as hostels, sometimes
also describe their accommodation as "assisted living units".
Hostels and nursing homes are regulated and partly funded by the
Commonwealth Government and different legislation, admission criteria
and funding arrangements apply.
Legal
Structures
There are
at least 8 different legal structures for retirement villages:
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Long-term lease |
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Long-term license |
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Strata title |
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Community title |
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Company title |
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Unit trust |
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Manufactured home |
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Conventional lease |
Different structures can have different implications
and raise different issues in terms of applicable legislation, stamp
duty, GST, service charges, responsibility for refurbishment and
capital replacement costs, security of tenure, operator default,
termination, vacating the premises, capital losses and credit risk.
Legislation
Each
State and Territory other than Tasmania has enacted specific legislation
that regulates the operation of retirement villages. The legislation
in each jurisdiction is different and has its own definition of
what is and what is not a retirement village.
In some cases the legislation applies differently to different legal
structures and contractual arrangements. Particular legal structures
and contractual arrangements may also attract the application of
other legislation, such as strata title, community title, companies
and securities, manufactured home or tenancy legislation.
Financial Considerations
Retirement village residents may be required to pay:
The nature of the initial entry price depends on the particular
legal structure. For example, it may be the purchase price
of a freehold property, security or other asset, or it could be
a loan, premium or prepayment of rent.
Departure fees are particularly important and particularly difficult
to fully understand. There are well over a dozen different
departure fee structures and they are a key factor in determining
how much you (or your estate) get back when you leave the village.
Depending on your financial resources, how much you get back could
well determine or limit your future accommodation choices.
Need More Help?
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Here
you will find a comprehensive consumer guide to resident-funded
retirement villages in Australia, called The
Retirement Village Handbook, which you can order on-line,
by phone or mail.
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There
is a free interactive Departure Fee Calculator that you can
use to work out how much a particular departure fee would be
in a broad range of scenarios. You can find it here:
Departure Fee Calculator
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Here
you will find an online, Departure Fee Analysis service where
the departure fee calculations are done for you in a table and
a series of graphs that are easy to interpret, understand and
compare. You can find more information about departure
fees and our service here: Departure
Fees
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