Retirement Villages - An Introduction
A retirement village is essentially a managed community for seniors, generally restricted to people who are over 55 years of age and their spouses. Their focus is typically on individuals who live independently and do not have significant support requirements, although a number of villages will have co-located Aged Care facilities to which individuals may transition over time if their need for support increases.
Retirement villages are either privately owned or owned and run by not-for-profit organisations; they do not receive government funding unless they also offer Aged Care facilities.
In the section below we focus on a number of characteristics commonly shared by retirement villages - many aspects of which are covered in more detail elsewhere in the website.
Types of Accommodation
The type of accommodation within a retirement village can vary enormously, from bedsitters in rental villages and highrise developments to expansive multi-bedroom, free standing homes within a planned development. Most seniors are however looking for properties that involve lower maintenance and the ability to "lock and leave " the properties whilst on holiday. Central security, emergency call buttons, electrical rather than gas appliances, handrails and ramps are all attributes which differentiate the accommodation from normal housing.
Common Facilities and Support
Most villages, and it tends to be a function of the size of individual villages and the cost of entry, provide common areas to be shared by residents - including dining, community and games rooms, library and craft rooms and sometimes pools, hairdressing salons and medical rooms. Some larger villages also maintain a village bus for shopping trips and social outings.
Some retirement villages also offer serviced apartments, which are sometimes called assisted living units or apartments. These apartments are usually offered with a standard package of services, such as housekeeping, meals, laundry and linen. If you require more services than the village offers, then you can arrange these on an individual basis or arrange additional home care services privately.
Retirement Village Management
Operating a retirement village is, by its very nature a time and management intensive activity, with each village typically having a dedicated operator or manager. The operator can be:
- The actual owner of the village
- a third party or associate of the village owner, appointed by the owner and/or original developer of the village, to manage and administer the village on their behalf
Unfortunately, Retirement Villages are the responsibility of the States and Territories and therefore we have a situation where each State and Territory has enacted their own specific retirement village legislation that defines a "retirement village" for the purposes of their legislation and different rules and definitions can apply when it comes to the relationship between retirement village managers and and their residents in different parts of the country.
In contrast, Aged Care is a Federal responsibility and there is a consistent set of rules in place across Australia when an individual moves into an Aged Care residential accommodation (Nursing) home. This is the main reason why, other than avoiding a lot of complexity, that this website does not focus significantly on legal matters and suggests that you seek professional advice before committing to any retirement village. Documentation can be extraordinarily complex sometimes, often excessively so in our opinion.
In most retirement villages new residents are required to make an upfront capital payment. Depending upon the legal structure, and we address the types of structure in more detail elsewhere, the purchase price can be variously described as a refundable deposit, in-coming contribution, an interest-free loan, a rent prepayment, a lease premium or accommodation bond. Whatever the description, it is effectively the payment you make for securing accommodation.
Note that there are situations where no capital payment is required for entry into a village - these villages operate on a pure rental basis and are becoming more common, in line with approaches in Europe and North America.
Departure and Exit Fees
Most retirement villages charge residents when they leave the village - again there is no standard name, or manner in which it is calculated, and it may be called a departure fee, deferred management fee, exit fee or similar. Whatever they are called it is exceptionally important that individuals understand how they will be applied before committing to joining a village. In fact, joining a retirement village should be considered as much an investment decision as a lifestyle decision and costs and contracts need to be scrutinised carefully to ensure there are "no surprises". To provide some context, you can expect that deferred fees will consume 35% or more of your entry payment if you leave after 6 or 7 years, but precise amounts differ significantly.
Making an informed purchase is the key and we provide for download a Short Guide to the Purchase of a Retirement Village Unit, which many retirees and their families will find is a good introduction to the main legal and financial and legal issues associated with moving into a Village.