This blog was created as part of our Journey of Care for the Ageing Event in collaboration with B’nai B’rith and Caulfield Shule.
What is retirement living?
- To live in a retirement village, you must be capable of living independently. This is distinct from government funded residential aged care where care services are provided.
- However, you may be able to access in-home care services if and when the need arises (and you are assessed as being eligible to receive those services), that allows you to, for all practical purposes, continue to live independently in the village.
- You should satisfy yourself that the village meets your requirements as far as the lifestyle and care proposition it offers now and into the future.
- What are you looking for? Community or care?
To live in a retirement village, you must be capable of living independently. This is distinct from residential aged care where care services are provided. However, you may be able to access in-home care services if and when the need arises, that allow you to, for all practical purposes, continue to live independently in the village.
It’s not very different from staying in your own home, except that you are living in a community for retirees or over 55s, and are provided certain communal services and have access to certain communal facilities. The decision is about lifestyle and community, staying socially connected, security and not having to worry about doing certain tasks like external house and garden maintenance.
You should therefore satisfy yourself that the village meets your requirements as far as the lifestyle and care proposition it offers now and into the future.
What will it be like to live there?
What will make or break your experience are the people and the management. You’ll never really know until you move in, but to get a feel for this, you should attend village events prior to moving in and talk to residents about their experience.
Will I be an owner vs non-owner resident?
Most retirement villages now operate under a leasehold arrangement, such that you don’t own the title to your unit, but rather are granted a long-term lease.
Whether you own the title to your unit or have a leasehold interest will affect your rights and obligations under relevant legislation such as your say over changes to common areas and increases to recurrent charges, your selling entitlements and right to receive aged care funding from the retirement village operator.
There is a common misconception that if you are a leaseholder your obligations regarding repairs, maintenance and reinstatement are akin to a residential tenancy whereby the landlord is responsible for repairs and replacements, however this is not correct. As a long-term retirement village leaseholder, such obligations are often more akin to property ownership whereby the resident is responsible for at least the interior of their home depending on the terms of your contract.
When will I get my money back?
Currently under Victorian legislation, non-owner retirement village residents are only entitled to a 6 months ‘buyback’ if certain selling rights giving them more control over the sale of their unit are not included in their contract. If they are included (at the option of the village operator), the contract determines the sunset date (if any) for payment of your exit entitlement. Owner residents are not legislatively entitled to any buyback.
Despite the legislation, the village operator may offer a guaranteed buyback under their contract, which is important when considering your next move.
Are there different contract options available?
The typical retirement village financial model is to pay an upfront lump sum ‘ingoing contribution’/purchase price for your right to reside in the village, ongoing fees for services provided by the operator while you live there, and exit fees including a deferred management fee deducted after you leave. You may or may not be entitled to capital gain if your home sells for more than what you paid.
Several retirement living operators are offering different contract options such as giving you the choice to pay the deferred management fee upfront instead of upon resale, receive capital gain vs no capital gain, a refundable/bond contract (where you get back what you pay) and a ‘rental’ or pay-as-you-go contract.
Be aware of different contract options available. It’s also important to consider how the different payment models impact any pension entitlements you may have or be eligible for.
Questions to Consider:
Moving to a retirement village is a major lifestyle choice. Before you start looking:
- Discuss your decision to enter a retirement village with your family, friends, and other people you usually consult on important matters.
- Consider alternatives, such as home help, seeking help from government or other agencies, or moving to a smaller home.
- Ask a financial planner about the best way to manage your income and spending.
- Check the state of the property market if you are considering selling your home.
- Ask anyone you expect to live close to about their plans for the future.
- Make a list of what you absolutely must have in a retirement village and another of features you want but do not need.
- Seek expert advice; for example, take the retirement village contract to a lawyer and/or a financial advisor before you sign.
- Talk to Seniors Information Victoria for free information about housing options, from independent living to residential care.
- Shop around to make sure you are informed about your options.
- Refuse to be hassled or hurried into a decision.
Common pitfalls to be aware of:
- Retirement living (“independent living”) is not care. Individuals have the legislative right to terminate if they need care of a kind that is not available at the village.
- What are you buying? Freehold or leasehold? Impact on legislative rights and obligations including the right to receive aged care funding from the village.
- Understand the costs involved, ingoing, ongoing and outgoing. Consider the impact on pension entitlements / eligibility. It is important to obtain legal and financial advice.
Where should I start this process?
- Research online, consider location, services, amenities, care proposition (if any)
- Visit several villages, meet staff and residents
- Obtain advice to compare options
What types of government assistance/grants should I be aware of?
Rental assistance may be available for rental villages and land lease communities. Otherwise, there is no government assistance for retirement living.
Key Resources:
www.consumer.vic.gov.au/housing/retirement-villages
Residents of Retirement Villages Victoria – www.rrvv.org.au
Seniors Information Victoria – 1300 135 090
Author:
Village Advisors is a specialist legal practice dedicated to helping residents and prospective residents of retirement villages.
Jessica Kinnear, our Principal Lawyer, is a trusted and personable solicitor with extensive experience in retirement villages, providing clients with unique insights.
It can be daunting when it comes to moving into a retirement village. Jessica and her dedicated team can help you navigate your options and provide invaluable advice and guidance throughout the process.
