Retirement villages

Retirement villagesAccording to McCrindle Baynes Village Census Report 2013, the most recent national retirement village resident survey, 98 percent of residents would, if they had their time again, make the same decision to move into a retirement village.This is not surprising when you consider that the Productivity Commission has stated that retirement villages, with their age-friendly houses and neighbourhoods, “can have a positive effect on the health and quality of life of older Australians”.There are a number of issues that seniors will need to consider when moving to a retirement village. After all, a retirement village offers more than just a home — it also comes with services and amenities as a right for the duration of a person’s tenure.One issue is that of the deferred fee payment option. Deferred fees are used by the majority of retirement village operators and help to compensate the village owner for the upfront capital costs of building the common infrastructure of the village — which usually includes a pool, bowling green and community hall — and allow the resident to part-pay for these amenities at the end of their tenancy, instead at of the start.This brings down the cost of entry into the village and, as a result, most retirement village unit entry prices are cheaper than comparable properties in the general community. Due to the limited income and assets of many seniors, this fee structure can be appealing.Clearly enshrined in the resident contracts is the percentage of the capital gain the resident is entitled to receive upon the sale of the unit to another party. The share of the capital gain can be negotiated between operator and resident before the contract is signed, and is often done in the context of the level of upfront loan and deferred fee.Residents’ rights are protected by stringent consumer regulations contained in state legislation. Residents are able and encouraged to seek independent legal advice before signing their contract.Moving to a retirement village is not an investment choice. It is a lifestyle choice that an increasing number of Australians are embracing, to maintain independence and the happiness that comes from being part of a supportive community.Catherine Carter is ACT Executive Director of the Property Council of Australia