Thinking of Living in a Retirement Village?
If you are over the age of 55 and seeking a lifestyle change, you may want to consider moving into a retirement village.
Retirement villages are regulated by the Retirement Villages Act 1999 (NSW). A common way to obtain a right to reside in a retirement village is to enter into a 99-year Lease. In doing so, you are essentially purchasing a 99-year Lease which will be registered over the title to the land. You will be required to pay an ‘ingoing contribution’ for the Lease, which is treated as a ‘loan’ from you to the Village Owner. You will also be required to pay ‘recurrent charges’ which are periodic payments (usually fortnightly) to the Village Owner for the maintenance of the village and provision of services.
If you wish to leave the retirement village, then in order to ‘sell’ your interest in the village, you will be charged a departure fee. The way the departure fee is calculated is provided for in the Lease terms and increases each year you reside at the village. Once your interest in the village is ‘sold’, you will be refunded your ingoing contribution (loan component), less the departure fee and any other costs you are liable to pay under the Lease. If during the period that you reside in the village, the home you occupy gains or loses value, this gain or loss will also be shared as provided for in the Lease terms.
In summary, moving into a retirement village is more of a lifestyle choice rather than a financial investment.
If you are considering living in a retirement village, or wish to obtain legal advice in this regard, please contact the Mullane & Lindsay property team.
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