Retirement Village Units Tips and Traps
One of the biggest factors to consider when deciding to move into a retirement village unit is the costs of the unit you intend on leasing. You may not be aware that there is more than just an ongoing contribution! There are ongoing costs (which may continue for some time after you vacate or pass away) as well as exit costs.
The Ingoing Contribution is payment for your right to live in the village and use the facilities in the village.
Generally you pay the legal costs of the village in preparing your residence contract and registration fees for registering the lease on the title. You will also need to pay your own legal fees for reviewing the residence contract and lease and effecting settlement (handing over the ingoing contribution).
General services charges
This is usually a monthly charge payable by the ingoing resident which covers things like administration, gardening and the provision of the other facilities in village (such as a pool or recreation centre) and usually include a maintenance reserve fund contribution.
These charges may continue for some time after you have moved out or if you pass away. Generally these charges continue until the unit is sold unless there is an extended period of time between when you vacate the unit and the sale, in which case it is sometimes apportioned between yourself and the village.
Optional personal services
Some villages offer additional services such as the provision of meals, doing your laundry, attendance at an onsite hairdresser etc. If you take advantage of these services then you will be required to pay for those services.
Body corporate fees (freehold units only)
If the unit is freehold, then you will be required to pay body corporate fees.
The exit fee is the fee you pay to the village which is deducted from your ingoing contribution. Generally this fee is a percentage of your ingoing contributed calculated based on a sliding scale based on the number of years you live in the unit.
You may be required to pay the costs to reinstate your unit back to its original condition. For example, repainting walls and replacing carpets.
You will need to pay the village operator’s legal costs to terminate your lease for the unit. You will also need to pay your own legal costs.
Village Operator’s capital gains share
If you participate in a capital gains share scheme, then the village operator may take a percentage of any capital
gains realised when the unit is sold.
Repayment of Ingoing Contribution
When you vacate the unit, the village operator generally does not have to repay your ingoing contribution until the unit is sold and the new incoming resident pays their ingoing contribution. If the unit does not sell within five (5) years then the village operator has to repay your ingoing contribution (less any exit fee and costs outstanding). This means you (or your estate if you pass away) could be waiting a long time to receive your money.
If you have any questions regarding the traps you can find yourself in when moving into a retirement village, feel free to contact us at:
firstname.lastname@example.org or call 1300 HATZIS (1300 428 947)