Diversity of Title

Villages in the private sector usually operate under leasehold, strata or company title while those in the not-for-profit sector often utilise a licence arrangement.

There are many different variations, e.g. loan-lease or lease-premium and it becomes confusing for intending residents to make comparisons and some states have specified mandatory contract inclusions to assist this issue.

The different forms of title mostly focus around ownership and resident rights.  There have been cases of unscrupulous operators abusing loan-licence title and with financial losses for residents.

The lack of national uniformity in legislation has not addressed the differences between retirement village legislation and the legislation associated with the different title types e.g. strata-title legislation.

Examples of disadvantages of different title forms:

  • Leasehold operators are being made liable for costs of capital replacement, refurbishment, depreciation and maintenance charges. New tax rulings have removed advantageous up front deductions and deferred income provisions.
  • Strata title requires stamp duty payment in most states and there are management and operations issues as the operator does not own the units so contracts need to be well detailed.  Stamp duty on a lease is usually at a much lower rate.
  • Company title incurs additional compliance costs and directors’ exposure under the Corporations Law.  Documentation can be more complex with matters like redeemable preference shares and this form of title is less understood by consumers.

Protecting your reputation starts with simplifying the complex. This handy checklist should quickly point you in the right direction and help you understand whether you have a case, and where to start to secure the best possible outocme.