Over 55s retirement villages

WHAT is an over 55s retirement village? Is it actually a retirement village?

OK, well let’s get the technical legal terms out of the way first. A retirement village is technically whatever is described as a retirement village in your particular state or territory retirement villages act.

Typically, it describes a retirement village as a community of older people (usually with a prescribed minimum age limit of 60 or 65) that occupy homes under a retirement village ‘scheme’, whereby they pay an ingoing contribution and an exit or departure fee. To call itself a ‘retirement village’, a retirement community has to be registered under and comply with the state or territory retirement villages act.

Over 50s or over 55s villages are completely different.

These communities come under your state or territory’s demountable homes or caravan parks act. This is because the nature of your occupancy is more in line with caravan parks than retirement villages, in that you own the house and lease the plot of land that the building sits on. So you only pay for the house upfront and a weekly rent amount for the plot of land from the community operator. Age restrictions are not part of the legislation, but may be enforced under the local council’s development approval from the village or the retirement community’s by-laws.

In theory, if you wanted to leave the village you are well within your rights to lift up the home (as you would a caravan) and take it to another site. However in practice, the homes are there to stay and cannot really be moved. Many of the original over 55s villages were demountable-type homes that could be relatively easily moved, although the new over 55s villages are proper brick and tile on slab buildings no different to a standard suburban home.

Other features of over 55s villages include:

• They are targeted to a younger demographic than your standard retirement village, which may have qualifying age limits of 60 or 65.
• You own the house outright and lease the plot of land – in retirement villages you occupy your residence under a lease or licence, or occasionally under a freehold title arrangement.
• You pay a regular fee (ie, weekly or monthly) similar to a body corporate or owner’s corporation fee which covers off the maintenance of the grounds and common areas, security, insurance, etc, as well as a component of rent for the land.
• The rental or lease component for the plot of land your house sits on may attract the government rental allowance, if you qualify.
• Most over 55s villages don’t apply departure fees or take a share of any capital gain when you leave.
• Because the facility is aimed at a younger demographic there are usually no care services provided on site. However, there is nothing to stop you from bringing in any care or other services you need from an external provider, just as you would if you were living in your own home.
• They should be a cheaper accommodation option because there is no land component in the purchase price.

There are some things you need to be aware of however:

• Make sure that your lease term on the land extends for a decent length of time – at least as long as you will be living there. 40 years and above should be adequate.
• Make sure your lease agreement does not allow the operator to terminate your lease for any reason you think is unreasonable, such as if the village operator goes broke or sells the village.
• Make sure that your lease agreement does not allow the operator to arbitrarily raise the lease fee amount.
• Find out who pays the rates – is this included in your weekly fee or not?

Until next time … love your retirement!

This article was provided by Richard Andrews, founder of Find My Retirement Home, a company that provides independent advice and buyers agency services to retirees looking to purchase a retirement home. He is also the author of the forthcoming instruction manual, DON’T buy your Retirement Home without ME!