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Retirement Villages: Tips and Traps for the Unwary

Retirement Law And Advice. Atkinson Crehan Law

The number of people making the decision to sell their home and move into a Retirement Village is increasing. We find many clients are deciding to move sooner rather than later into a villa. This is to be able to enjoy a more relaxed lifestyle before health changes force them to move from their home.

The biggest difference between the traditional home ownership model and going into a Retirement Village is that you are granted a personal licence to occupy a particular Villa. You would have this for as long as you (or your health) determine that you remain there.

There are specific entry requirements (i.e., minimum age, vaccination status, current Will & Enduring Powers of Attorney). Often a needs assessment is required to ascertain the appropriate level of independent living.

There are financial implications to this decision as well as it being a lifestyle choice, rather than a straight investment decision. You pay a large capital outlay (often similar to what you have sold your house for) but receive back only 70-80% of your capital outlay at the end. You will incur an ongoing weekly fee for the duration of your occupation. The Village then looks after the marketing and selling of your Villa. The repayment of the capital sum is only made once someone else has paid for it. This could be 6-9 months after you have vacated.

The Village operators recognise that making this decision is a big one. There are opportunities for you to change your mind and receive any deposit funds back. Many villages offer a full ’90-day money back guarantee’ once you move in.

Much has been in the media in the last few months of proposed changes to the Legislation to shift the power imbalance between Operators and Residents. Several reforms have been suggested but, it is a case of waiting to see how far the review will go. Will it force Operators to make changes?

What those changes will be?

Of most interest to residents is:

  • Sharing of capital gain
  • Residents being paid out their capital quickly; and
  • More support for residents needing to move from independent living into care.

To get further advice contact one of our specialists:

Amanda Crehan - Director - Atkinson Crehan Law

Amanda Crehan
Director

Jacintha Atkinson-Manson - Director - Atkinson Crehan Law

Jacintha Atkinson-Manson
Director

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