The industry, which has minimal regulatory oversight, has been described by retired actuary and academic Tim Kyng as peddling "cunningly designed rip-offs" and by crossbench federal MP Rebekha Sharkie as engaging in a form of "corporatised elder abuse".
Some of the elderly residents or their families describe them as a financial prison, a disaster and ethically bankrupt.
Many complaints centre on the fees charged when residents leave, which often include an exit fee and the cost of refurbishing the villa.
One retirement village resident, 89-year-old Joan Green, sees it as a form of robbery.
After buying in 11 years ago for $384,000, she will walk out with $81,000 after the retirement village operator deducts its various fees.
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"No friend ever served me, and no enemy ever wronged me, whom I have not repaid in full."
I looked at retirement village 10 years ago and found that you bought in paying 30% of the value, balance paid on exit. The system was set up to allow retirees to get accommodation with minimal assets.
End result it was contract strongly in favour of business owner, especially the refurbishment part with no limits and open to extortion in my opinion. Legislation has changed now making slightly better.
I chose an over 50s community, which was still exported with market rent review (bring rent up to whatever another village was able to push up prices). After a 28% increase the laws have changed to CPI , more realistic, only took the Qld Gov 5 years beyond promised legislation change. Just a lazy government.
Bottom line intending purchases into retitirement living need to get good legal advice before signing. Once a contract is signed that is what you have despite how unfair it is, I did not realise the consequences of market rent review until too late.
Bottom line, Buyer beware, owners only after money not your welfare.
Several years ago when my mother needed to move to home care at my home it was left to me to finalise the "sale" of her retirement village villa.
That's when the greatest "rip-off" began. The forced refurbishment costs and exit fees totaled over $120,000 for a single garage 2 bed villa.
My parents, when they bought into the retirement village, sought legal advice at the time, as you would when buying any property.
However, I don't think they understood the contract complications and always believed that they "owned" the villa.
If contemplating buying into a retirement village seek legal advice from experts in the field and understand every clause in the contract especially the EXIT clauses.
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Cheers, Richard (Dick0)
"Home is where the Den is parked, Designer Orchid Special towed by Jeep Grand Cherokee Limited"
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There are retirement villages that have no deferred Management fee. which I believe is the type of village mentioned in this article.
In the villages that have no deferred management fees, one is only accountable for the weekly/monthly fees.
Upon the sale of the unit, one received all the capital gain. However I have not checked, but I do believe that the monthly fees are more expensive.
Still a bit of a rip-off whichever way one goes.
And bare in mind when it comes to selling, your target audience is drastically reduced to about around 5%, perhaps less.
As the saying horses for courses. Do your homework first before making a decision.
I have lived in a lifestyle village for the last 9 years, the only exit fee is the sales commission on sale of the house.
I own the house, no refurbishment fees, just can't chop it up and take it with me.
The house value has nearly doubled since we bought it, so not all villages are the same.
The houses sell as quickly as they come on the market at the moment.
We have recently sold our 'mansion' in the burbs & moved to a more suitable 'over 50's' village by the bay.
We looked closely at 'Retirement Villages' with their exit fees (9% for the first 4 years under Qld Legislation and capped at max 36%). Some shared any capital gains and all required refurbishment and usually a 3mths max time slot for resale while continuing to pay site fees. Not for us.
We looked very closely at both the legislation and the contracts (that required you to certify that you had legal advice on their contents .. as we certainly did before committing) of both Retirement and Lifestyle villages. The 'Disclosure Documents' were comprehensive & covered all of the issues. All 'sales people' were very careful to point out the exit fee & ongoing site fee situation where applicable & strongly emphasised the financial aspects & that these villages were not the answer for all people.
The more expensive lifestyle option sales people, were very outspoken on emphasising that we were buying a lifestyle & that it was not the cheapest option both WRT the purchase price and the ongoing Site Fees.
We finally chose the "Lifestyle Village/Over 50s" option and after more than 6 mths are very happy with our decision. Demand for the homes in our boutique village is strong & I am certain that resale will not be an issue when that need arises.
Perhaps the market wasn't as tightly regulated in the past where some people entered into a less than favourable arrangement without sufficient understanding. From my point of view I am unsurprised by what these people are experiencing. It is indeed why we chose to avoid RETIREMENT VILLAGES.
ps. BTW, demand for Retirement village places was considerable often with waiting lists, that required a deposit to join & 12months wait time. Similar with our over 50s village.
-- Edited by Cupie on Wednesday 2nd of October 2024 11:21:11 AM
-- Edited by Cupie on Wednesday 2nd of October 2024 11:26:17 AM
I have lived in a lifestyle village for the last 9 years, the only exit fee is the sales commission on sale of the house. I own the house, no refurbishment fees, just can't chop it up and take it with me.
You are not living in a retirement village. It sounds like you are living in a Residential Land Lease Village. They operate under different regulations.
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PeterD Nissan Navara D23 diesel auto, Spaceland pop-top Retired radio and electronics technician. NSW Central Coast.
