What is retirement accommodation?

Generally, retirement accommodation is understood to be a collection of dwellings predominantly occupied by retirees who have entered into contracts with the operator of the village.

Retirement accommodation can be privately owned and operated, run by a not-for-profit organisation or owned by the residents, who engage a manager under contract. They can be self-contained villas, semi-detached units or high-rise apartments. Each village will differ in:

communal facilities such as swimming pools and dining services
arrangements for maintenance, gardening and in-home support
emergency and security services
eligibility requirements for working residents, spouses and partners, visitors, pets, parking etc.

To secure retirement village accommodation you may be asked to pay for ongoing costs for services such as maintenance and upkeep.

To get a better understanding of the issues you are likely to face, you can ask to speak to existing residents or the chair of the committee of residents.

What am I purchasing?

Often when you buy in to retirement accommodation you are not purchasing the freehold or strata title as you would when you purchase a home. This means that you may not be purchasing the land and the dwelling. Instead you may be purchasing:

community title
a right to reside in the dwelling, like a leasehold or rental
a loan/licence that means you loan money to the village operator in exchange for a licence to occupy a dwelling
shares in a village
units in a unit trust
a title or strata title that has restrictions on use and sale of the property.

These are the most common arrangements; however, there may be others. If you cannot tell what type of ownership applies—just ask!

What questions should I ask before signing a contract?

Contracts for retirement accommodation can be confusing so you should seek independent advice and get all the information you need before you sign.

The following questions may help you understand the nature of the arrangement you are considering.

Facilities and level of care

What facilities and services do I need now and in the future?
What level of support is provided to village residents? How much does it cost?
What rules will I have to comply with?
Are there any plans to develop the village?

Costs

Do I require a bond or deposit to secure a place?
What are the ongoing costs and how are they calculated?
Are fees paid on an ongoing basis or deferred and paid out when I sell the property?
What costs are covered by the village? Are bills (such as rates, water, gas etc.) included in the ongoing fees?
Are ongoing fees likely to increase and by how much? How are the increases determined (e.g. are they linked to increases in the aged pension or consumer price index)?
What increases have occurred in the last five years?
Do residents have any control over the quantum of fee increases? Can fee increases be rejected? If so, how is this process managed?
What happens if I can no longer afford the ongoing fees?
Who benefits from any rebates associated with the property?

Management and dispute resolution

Who manages the village and do I have a say in how it is managed?
Have there been disputes between residents and the operator? What is the process for resolving disputes?
Does the contract require me to give the village owner power of attorney?

Leaving the village

Are there any restrictions, conditions or delays associated with leaving?
What fees, levies or charges apply when I leave?
Will I receive any of the capital gain that arises from the sale of my unit/villa?
Can I recover any of the initial contribution I paid?
Are there any delays in receiving payment when I leave?
What happens to me if the retirement village is sold or goes into receivership?

I receive Centrelink and Veteran’s affairs payments

If you receive Centrelink or Department of Veterans' Affairs payments, these may be affected if your living arrangements change, such as when you move to a retirement village.
For further information call Centrelink on 13 2300 or visit their website. For the Department of Veteran’s Affairs call 13 3254 or visit their website.

Disclosure statement

Laws in some states and territories require the operator to provide you with a document (sometimes called a disclosure statement) that sets out relevant details of the contract.

Retirement village operators are required to give you certain information before you commit to purchasing. The information required differs between states and territories and is usually included in the contract. Cooling-off periods may also apply in some states and territories – ask before you sign.

If you have concerns with a contract you have signed, there are laws that protect you from unfair terms in standard form consumer contracts. These are contracts where you have little or no opportunity to negotiate with the business. You can contact the ACCC or your local consumer protection agency for more information.

What happens if I want to leave?

Understanding what arrangements are being offered to you is critical to understanding what you will receive or have to pay when you leave. You may be required to continue paying the ongoing fees after you have left the complex.

Sometimes you pay a bulk amount or an entry contribution when you move in, and when you leave you receive a refund of part of that money. You will not normally receive a refund for the full amount of the entry contribution because it will be reduced by the following fees and charges:

a percentage charge for each year that you were in the village or a ‘deferred management fee’ payable when you leave
any liability for outstanding recurrent charge/fees—these may be payable until the dwelling is sold or occupied by a new resident.

If you do purchase the title to a dwelling, there are often restrictions on how, when and to whom you can sell. For instance, some contracts contain an option provision that requires you to offer to sell to the village operator first. Other contracts have re-marketing policies that stipulate the way you can sell and the costs involved. You should also get advice on the best type of arrangement for you if two of you are moving in to a village.

Agreements may include a condition that any capital gain or increase in the value of the property must be retained by the village operator or shared with them, which will reduce the amount you receive if you sell.

Transitioning to residential care

Be sure to ask about any higher care arrangements available to residents and any restrictions that apply and whether the contract is flexible enough to accommodate greater support. Some facilities offer a range of support levels.. You could also visit the residential care facilities in the area and ask what their entry requirements are.

Need help?

If you have a complaint, see the ACCC’s how to complain page for guidance.
If you are unable to resolve your complaint directly, you can contact the ACCC or your local consumer protection agency for more information on your consumer rights and options. Your local office may also be able to conciliate (help you negotiate with the professional).

See the Department of Families, Housing, Community Services and Indigenous Affairs -Accommodation choices for older Australians, for more information on retirement villages.

Resident associations in some states and territories can also offer further advice from a resident’s perspective.

Retirement accommodation