The ins and outs of retirement fees

Posted on Monday, August 17, 2020

Article by: Greta Andrews-Taylor
Source: The West, Monday, 17 August 2020

When entering the retirement living sector, you may have a lot of questions regarding what fees are required and when these payments are due.

There are different types of payments available, each containing different expectations and requirements.

Bethanie Retirement Village Sales Manager Amanda McLearie said lease for life, strata title or a purple title were the different contract types for retirement villages.

“All operators have different terms to their contracts but when looking at moving into a village it is advisable to look at the ingoing, ongoing and outgoing costs and compare these to what would be right for the individual and their circumstances,” she said.

Operating on a lease for life, Bethanie has two types of these contracts.

“There is standard lease for life with a deferred management fee based upon the resale price,” she said.

“The guaranteed buy back with a deferred management fee based upon purchase price is where all monies are paid back within 45 days of the resident vacating. This lease for life contract is only available at present for apartments at Bethanie on the Park in Menora.”

Brightwater Care Group Kingsway Court Retirement Village Commercial Services General Manager Darren Woolcott said tenure of homes at Kingsway Court was secured by way of lease for life, which involved residents paying a monthly fee to cover the running costs of the village.

“This fee contributes to the upkeep of facilities, gardens, staff, water rates to common areas, security and insurances,” he said.

“A lease for life at Kingsway Court means that the resident leases the unit for their lifetime from the commencement dates of the lease, or when they wish to move from the village.

“The resident buys the lease at the market value or the price set by the outgoing resident, and is entitled to the exclusive right to occupy the home and use the common facilities.”

Apart from the full security of tenure as part of the lease for life arrangement, Mr Woolcott said residents had the benefit of knowing the village was maintained to a high standard.

“There are no council rates as well as no GST payable on the lease, which results in a lower purchase price,” he said.

“Benefits include building insurance, 24-hour security and maintaining the common facilities, such as a bowling green, a putting green, a heated pool, a lounge and bar, and a library, as well as landscaping to front gardens of the homes.”

Mrs McLearie said as a guide, when looking at a retirement village, you should compare what facilities and common shared services were available and where your money would be spent.

“Look at prior financial operating budgets to see how these ongoing fees have changed through the years, and consider potential increases to ensure you will be able to afford living in a village,” she said.

“Above all, look at the village community and activities to make sure you will be happy living there. Make sure the village can offer you the lifestyle you are looking for.”

Mr Woolcott said the obligations of the leasee and the leasor differed across villages and would be outlined in your contract/lease.

“Do your research and speak to people. Visit the villages you are interested in and speak to some of the residents who already call it home. Their insights into village life and the leasing arrangements will be invaluable,” he said.

“Consider discussing the decision to enter a retirement village with family, friends or a trusted advisor. Before signing a residence contract it is important you read all the terms of the contract and ensure you understand the information and its implications.”

Everyone has an obligation to work together to make sure the village is the best place to live, according to Mrs McLearie.

“The operator has an obligation to make sure the village is run professionally and maintained to make sure it is a safe and supported environment,” she said.

“The resident has an obligation to follow the rules of the village so everyone can enjoy the facilities on offer.”