Retirement Communities
Retirement communities come in all different shapes and sizes – from the people that live there to the range of lifestyle choices they are wanting to enjoy
Tip: There are lots of different terms used by retirement communities from the traditional “retirement village” or “over 55’s community” to the more contemporary “gated community”, “lifestyle resort” … and even “aged care”. The reality is that most retirement communities are either a Retirement Village … OR … a Land Lease Community.
What is a Retirement Village OR Land Lease Community Retirement villages operate under state (or territory) legislation with the rules varying from one state to another. Generally speaking, the legislation prescribes what is … and isn’t … a retirement village, who can be a resident (typically a minimum age of 55) and the legal contracts and disclosure documents that the operator is required to give you.
Land lease communities also operate under state or territory legislation … but different rules and requirements than retirement villages. In a land lease community, you own the home but lease the land where the home sits from the community operator. Some cater only to permanent home-owners, whilst others have a mixture of tourists, tenants and long-term casual occupants.
There are also different types of operators within the industry - ranging from large corporations to small family businesses. Types of accommodation Accommodation within a retirement community is often categorised as “independent living” or “supported living”. Independent living typically provides the lowest level of care and support and is much like living in your own home — with the exception that there may be an emergency call system and very little if any home maintenance required by you.
There is typically a community centre (with a calendar of events) with the ability to use the facilities and the company of likeminded people. Supported living provides a higher level of assistance through domestic services such as cleaning and meals and in some cases, they deliver care through government funded packages, private carer’s or a combination of the two.
Breaking down the costs - Ingoing, Ongoing & Outgoing Ingoing In a retirement village - the ingoing cost is the price you pay for your right to occupy your home (or apartment) and to use the common facilities, typically this is on a leasehold or licence arrangement. In a land lease community - the price you pay upfront is to buy your home and have a leasehold over the land. Other costs may include the cost to prepare your contract or register your Leasehold on the operator’s title or stamp duty.
Ongoing in both retirement villages and land lease communities’ residents pay a weekly or monthly fee towards the running of the community. In a retirement village this is often called a “general service charge”, whilst in a land lease community it’s usually called “site fees”.
Outgoing Tip: The greatest confusion of retirement communities comes from the exit fee – the biggest part of which is normally the Deferred Management Fee (DMF) and is a significant part of your exit fee (anything between 25% and 40% is common).
Other outgoing costs include agent’s fees and marketing expenses and possibly the cost of repairs or improvements to your home. In some cases, the amount you get back will be paid to you shortly after you leave … or you will need to wait for your home to be sold to receive your money back.
Legal considerations: Your legal contract is a very important document that sets out your rights, responsibilities and costs. In a retirement village your legal contract is often a Leasehold or Licence Agreement. In a land lease community your contract typically has two parts: the purchase of your home and your lease over the land. A solicitor, experienced in retirement community matters, can help to identify the relevant issues that should be considered before entering into an agreement.
Social Security considerations: Your choice of retirement community impacts in various ways your potential age pension entitlement. In a retirement village - the amount you pay for your home is used to determine whether you are a homeowner or non-homeowner for age pension purposes. You may also qualify for rent assistance. As you own your home and lease the land in a land lease community, from an age pension perspective you are a homeowner (your home is exempt) that is eligible to receive rent assistance based on your site fees.
Care considerations: Similar to the care services in your own home, there are a range of care services you can receive in a retirement community – Commonwealth Home Support Programme (CHSP), a Home Care Package (HCP, private carers or a combination. There are care considerations to think about when looking at these options.