Moving into a retirement village like any new chapter in life is an exciting opportunity, however retirement village contracts are often extensive and contain many financial aspects which you and your beneficiaries should be aware of. Often residents spend most of their life in their new home, leaving the trustees of their will with the task of liaising with the Operator (the manager of the village) regarding the sale of the property. It is important that the trustees and beneficiaries are fully aware of the financial aspects of a retirement village contract.
All retirement village contracts include ongoing fees such as recurrent charges. These fees are often charged fortnightly or monthly and are for the upkeep of the village. In addition, many villages offer optional services which are payable on a user pays basis. Operators of retirement villages (especially in the private sector);
- may charge deferred management fees to residents i.e. a percentage fee payable by the resident to the Operator when the retirement village contract ends. The fee is often based on the resale value of the property;
- may charge a non-refundable component i.e. a percentage of the original payment that will be retained by the Operator;
- may share in the capital gain of the property i.e. where the resale value of the property is more than what the resident paid for it.
The Retirement Village sector and Fair-Trading NSW recognised that residents require more clarity on the financial aspects of retirement village contracts. To make retirement village contracts more readily transparent the Retirement Village Regulations 2017 made many amendments to the mandatory disclosure statement. The mandatory disclosure statement is a prescribed document which provides residents with information relating to the village, the Operator and the cost of living within the village. The main September 2017 changes to disclosure statements are as follows:
- an Average Resident Comparison Figure (ARCF). The ARCF is designed to enable residents to compare a prospective property with other comparable properties within other villages; and
- a new item 13 that;-
- specifically directs residents to the Fair Trading NSW retirement village calculator (rvcalculator.fairtrading.nsw.gov.au) for assessment of the financial aspects of living within a village; and
- outlines specifically the financial aspects of a proposed property acquisition;
Atkinson Vinden in addition to outlining the financial aspects of a retirement village contract can assist you with the sale of your home. We specialise in assisting people wishing to sell and downsize and transition smoothly to a retirement village.