The decision to move into a retirement village is not like a traditional property investment, a point missed in the 7.30’s program’s recent coverage of the sector.
The program’s attack on the retirement village model has focused on the sector’s Deferred Management Fee (DMF), where residents pay a lower incoming amount to purchase their home but pay a fee to cover their time in the village when they leave.
This is very different to buying a residential property, where you are typically looking for a big increase in the value of the property when you sell.
As Anne Caine, the Secretary of the ACT Retirement Village Residents’ Association, explained to ABC Radio Canberra:
“Moving into a retirement village is not like buying a house. You are buying into a community where the operators are providing a range of services, which are very complex, broad-ranging and sometimes luxurious. Operators have to pay for them and there are fees we pay ingoing, during and going out. These are businesses which make a profit and if they don’t, there would not be any retirement villages.
“The residents we deal with are overwhelmingly very happy with their lives in the retirement villages. The bigger operators are very professional, very supportive of their residents. At the COTA ACT Seniors and Better Ageing Expo, there was a lot of interest about moving into a retirement village. It’s very hard to get in.
“People do want to move into this supportive environment. They are very beautiful places to live.”
Get legal and financial advice when considering retirement living
Retirement villages are designed to provide support and community for older people looking to age independently at home for as long as possible.
Typically, retirement village units are priced at a lower price than the average median unit price because residents pay a DMF when they depart the village.
This makes them an affordable option for older people looking to downsize from the family home and free up cash to spend on their retirement and enjoy their later years.
Our advice if you are considering retirement living is to make sure that you understand the contract and how much money the operator will receive to cover your time in the village.
The village operator will advise you to take legal and financial advice on the contract you have been given. Be sure to take that advice and discuss the move with family and friends so they understand that this is your decision and that you understand the value of the move.
And remember there are built-in cooling-off periods if you change your mind.
Over 250,000 Australians call retirement living home – this would not be the case if people were not happy with their decision.