There are several fees and charges associated with living in a retirement village. Following is a brief outline of the costs you can expect to encounter when entering a retirement village in New South Wales.
The costs involved with entering and living in a retirement village can vary considerably, depending on the type of property, the particular village and the facilities and services offered. These costs are regulated in New South Wales by the Retirement Villages Act 1999 and Regulations.
Generally, you will be required to pay a deposit before entering the village. If you enter into a retirement village contract with the village operator, the deposit will form part of the purchase price or entry payment.
Entry Payment/Purchasing Price
When you buy into a retirement village, depending on the type of tenure you have, you will either pay an entry payment or a purchase price.
Leasehold arrangements are generally set up so the entry payment reflects the current market value of the property, and is usually treated as an interest free loan to the village operator.
Under strata, community and company title, you generally pay a ‘purchase price’ for the legal title to your property, as you would when buying a normal residential home.
You will normally only have to pay stamp duty if you are buying a strata, community or company title property.
For leasehold and licence arrangements, stamp duty is generally not payable in New South Wales.
Extra Fees and Charges
Almost all retirement villages have monthly or recurrent charges to cover the day to day running costs of the village. These will cover things such as maintenance of facilities, staff, water rates for common areas, security, insurances including workers compensation and public liability, and village building insurance.
You may also have to pay for additional services such as laundry, meals, hairdressing or help with personal care.
When you permanently vacate a retirement village, depending on the type of property and your contract, you may incur marketing and sales costs in securing a buyer or new resident.
The village operator may take the responsibility for this process, or assist you or your estate in the resale or re-licencing of your property.
Leasehold and licence entry payments are refunded when you move out of the village, minus any exit or deferred management fees. Refunds are usually reliant on the property being re-occupied, so there can be delays in payment.
Under strata, community and company title, you will not receive any payment, until the property is sold.
While the resale value will be determined by the market, there are additional factors in a retirement village that can impact on the value of your home. These include village management, and the services and amenities available to residents of the village.
Departure / Exit Fee
The village operator will usually deduct a ‘deferred’, ‘departure’ or ‘exit’ fee at the time of settlement of sale or re-occupancy of your home.
The amount is calculated using a formula that generally involves a percentage of your successor’s entry cost multiplied by the number of years of your occupancy, and may also include a share of any capital gain or loss. The method of calculation should be set out in the retirement village contract.
Even after you have left the village, you may be charged some fees to cover costs, such as ongoing maintenance fees, until your property is sold or occupied.
Where to Next
The above is a very brief outline of the fees and charges that may be payable when entering, living in, and exiting a retirement village, and may vary significantly from one village to the next.
When considering moving into a retirement village, it is important to seek expert legal and financial advice to ensure you understand how these fees and charges may affect you and your family.