Questions About Retirement Village You May Be Wondering Right Now
Q: “What do I ‘own’ when I purchase a Retirement village unit?”
You do not own the unit, or the land. You own a licence to occupy the unit and enjoy the common areas. You have purchased
the right to live there for your life time. There are conditions on these licences and rights. Namely, if you misbehave,
you can be evicted. So the days of wearing nothing but your underpants whilst you garden are behind you.
Q: “Can I get a mortgage?”
No. There are no mortgages. You'll need to pay the full amount before moving in.
Q: “If I purchase the unit for $200,000 today, what is it worth in 10 years time?”
The same amount. The value of the unit is frozen on the day you purchased it. A 20% - 30% fee will be deducted from this
amount, and the amount left over will be paid into your estate. This fee is sometimes called an "amenities fee", or
"facilities fee", or "village contribution".
Q: “What is the weekly cost of staying in a retirement village?”
Typically the weekly fee ranges from $100 - $150. You can expect this fee to cover rates, insurances, power. Most likely
you will have to pay separately for your own telephone and things such as maintenance of the interior (eg vacuuming). Some
retirement villages provide meals, a hairdresser, a workshop with powertools, gym, bowling green, swimming pool etc.
Q: “When I die, does my family get the value of the unit straight away?”
No. The unit needs to be sold to another person first before your capital is freed up. A 20% - 30% fee will be deducted
Q: “Does my family have to pay to restore the unit to as-new condition?”
They will not be invoiced for deterioration to the interior that has occurred during normal wear and tear. For example,
your carpet wearing thin (this is a new rule since 2008). But anything such as spilt wine on the carpet or smoking damage
will result in a charge. For contracts made prior to 2008 the managers of the complex can refit the unit to brand-new
condition with a new kitchen, bathroom etc, and send your family the invoice.
Q: “Can I leave before I die?”
Yes, but it's an expensive way to go. Once the unit is sold to someone new, you will be reimbursed the amount you invested less the fees (20-30%).
The 8 main benefits of moving into a Retirement Village
- The security of a gated community
- Someone else manages repairs and maintenance issues
- Your neighbours are just like you (eg you’re unlikely to have to call noise control to get loud music turned down)
- Help is moments away if you have an emergency
- Fixed costs are easier to budget for
- If you go on holiday, it’s easy to arrange your mail, pot plant care etc
- Your children feel more comfortable that you’re now in a safe environment
- You can free up capital from selling your home for recreation and travel