Retirement Village Advice

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  [Deactivated] on 12/09/2017 - 17:54

  if you have a village in mind maybe give them a ring and see if they have any for rent, that way they can try before they buy.

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  oerpbqk on 12/09/2017 - 18:42

  +6

  I helped a organize a relative's move into a serviced apartment in a retirement village in country NSW (small 1 bed apartment with kitchenette and dinner in village dining room). It's with Australian Unity and they seem good. Very well priced - both purchase price and monthly fees. Relo likes it and feels at home there. The commercial mobs all were a lot dearer (2 to 3 times). I would check out the mutuals like Aus Unity and the non-profits.

  We had a solicitor check the contract (the same one who did the conveyancing on the sale of their property) which I think was definitely worth while.

  If the "purchase" price is under a certain low limit which you might be under if it is non-profit, country and small, then they are classified as a renter not an owner by Centrelink and they will get rental assistance from Centrelink (if on a pension).

  Exit fees of 3% per year based on incoming next retiree's ingoing contribution, capped after 10 years.
  sounds a bit dodgy if it means the exit fee is based on what the next resident pays. However the solicitor will know if that is normal.

  • 

    serpserpserp on 12/09/2017 - 20:48

    +2

    I can also vouch for Australian Unity, they run a good operation (as far as the ones I've seen).

    To be honest, I have a fundamental issue with retirement villages unless you have money to burn. I guess the main aspect that people want to get out of it is the social interaction. But then most of the oldies I know have their set friends and get really uptight about new people in their lives unless they do EXACTLY what they want at all times ;).

    I actually think it is better for oldies to downsize to a property that can be modified to be safe for their stage of life and mobility (and also customized just for them), and then in need, you can get services organized (ie. nursing care etc.) for them as required. If your parents are in relatively good health, this can be a cheaper option that won't burn away everyone's capital. If a death was to occur and the premise wasn't needed any more you can sell it without being gouged by somebody at what can be a very emotional process of life (ie. a death of a loved one).

    Personally I've known people getting into retirement villages too early, and being bored with the lifestyle after a few years and want out as it really wasn't what they expected. Another problem people come up against is the cost of getting into one breaks the bank so much that they don't have the financial flexibility to get out of them, this is why I think downsizing with the support and help of loved ones can be a much more flexible, involved, caring (and sometimes cheaper) proposition that is in the best interests of everyone involved.

  • 

    ripsnorter on 12/09/2017 - 23:49

    Australian Unity, thanks for the tip; there seems to be at least one in the area my grandparents are looking in so will definitely discuss it with them, thanks.

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  Jabberwocky on 12/09/2017 - 19:56

  +6

  Take care of them.
  Keep them with you.
  They need you now as you needed them when you were a child.

  Always keep your elders/parents/grand parents with you and take care of them whole & kindheartedly until they live.

  • 

    mskeggs on 12/09/2017 - 20:18

    +2

    While I like this sentiment, I would guess the average Australian in this age group still wants substantial independence, which they feel they can achieve in assisted living more than under a kid's roof.
    My experience with oldsters is they underestimate the speed they will decline (lots of marketing showing grinning golf playing etc) and they make choices for a long term that turns out to be fairly short.
    That said, one grandmother spent the best part of 30 years in small villa in a over 55s place and she enjoyed it. Better for her to live in the town she always did, with friends and neighbors close, and help if needed not too far away.

    I think she was pretty lucky, however, to keep her health and marbles well into her nineties.

  • 

    PVA on 12/09/2017 - 20:40

    sounds good, but not what my parents want. Retirement village doesn't mean they need caring for remember.

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  PVA on 12/09/2017 - 20:39

  My Dad was looking into this at the start of the year but decided not to.

  Are the figures reasonable..
  - they can keep any capital gain but will pay up to 30% exit fee - there goes any gain plus you pay the cost of a big refurb (it will be more than a repaint, will be kitchen/bath refurb etc) and need to be done by their contractor group.
  - $330 per month maintenance fee - what does that cover - some is its only outside stuff, others was inside like light globes, washers etc.
  - what happens if one or both pass away - no money left to the kids as its just a lease?
  - how does it affect any pensions they may get when selling the family home to lease here.
  - how will it affect and pensions etc if one goes to an aged care facility - thats also a biggie to consider

  • 

    ripsnorter on 12/09/2017 - 23:59

    -1

    keep any capital gain but will pay up to 30% exit fee

    These just about even out assuming the property appreciates and I think it is about the best we could hope for. Good point about high refurb costs after 10 years.

    $330 per month maintenance fee - what does that cover

    From what I understand, the village owner's operating costs, thinks like their salary and utility rates of communal areas. We'll have to take a close look though to determine what other living costs won't be covered by this.

    what happens if one or both pass away

    When both pass away the executor of the estate will sell the residences right and cop the exit fees just as if they were still alive and voluntarily departing the village, I believe.

    how does it affect any pensions

    This might be something I have to confirm with solicitors.

    • 

      PVA on 13/09/2017 - 12:59

      I was just pointing out these things that stopped my dad for going to one.
      Check about if they pass away, maybe not true that it's sold off after, it maybe just lost as you are leasing. There are lots of little traps , you assume things like selling or that one can stay if the other partner passes but that may not be the case.
      Mum is in aged care and Dad selling the house and going to a retirement village was not good financially as mums aged care was then something like $50 per day extra.
      He went to a good financial advisor so I suggest your grand parents do the same.

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  toniyellow on 12/09/2017 - 23:17

  Two calculators launched recently for comparing these, the second one is NSW fair trading but might be interesting anyway

  http://www.mq.edu.au/newsroom/2017/08/22/macquarie-universit…

  www.smh.com.au/business/consumer-affairs/estimated-cost-calc…

  It does seem like a sector in need of better regulation

  • 

    ripsnorter on 13/09/2017 - 00:07

    -1

    Thanks for that. I saw the NSW one today which in part prompted this post.

    I wasn't aware of the Macquarie calculator though, which I have now found here. Save me struggling with Excel formulas like I currently am! Cheers.

• 

  horsome on 13/09/2017 - 00:33

  +1

  I've reviewed a couple of RVs from the inside so have some insight. It's a free for all at the moment, you'd be lucky if the people running the villages actually knew how the contracts work.

  A lot of the time they are sold like they are any other residential investment but they're not, is a long term deposit with reduced cash back at the end (the exit fee covers the gain and then some as the reselling value is quite poor compared to the normal residential market). It is not an investment in the true sense of the word.

  What value does the resident get? Who knows could be anything there is little regulation in this front from what I understand. The operator/owner just needs a licence and away they go. The larger non for profits have probably got this sorted out better, but would be at the cost of residents. There is some work for the industry to do on this, but it's not looking good.

  The appeal is limited, but as mentioned above, you would be better off downsizing, fitting it out, give them portable emergency buttons, full security system and teaching them how to use uber to get around (to the bowls club, rsl, golf course, wherever!). In terms of the contracts they could save tens of thousands or even six figures with strong capital growth of the property.

  • 

    PVA on 13/09/2017 - 13:03

    +2

    Yes about the downsizing and setting up with monitors etc, that's what we figured was best for Dad but in the end he decided just to stay at their house and, importantly, he is very happy now he looked into options and decided.

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  slowmo on 25/09/2017 - 14:05

  +1

  long read but quite relevant : http://www.smh.com.au/national/jyls-journey-to-aged-care-i-f…

  not just considering for loved ones, but it makes me shudder to think that in a few decades time, I would be facing the same kind of 'fate' if these sort of things don't get properly regulated or monitored.

  we all will grow old ….

  I hope OP finds an acceptable solution (for grandparents or any loved ones who are looking for good RVs) eventually.

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  yyhazy on 27/09/2017 - 17:09

  +1

  Law student here. Literally just did an imaginary case on retirement village laws few weeks ago. Bottom line: don't trust anything the sale representative says (look up entire agreement clause) and get a lawyer to sit down and read through the contract.

  • 

    ripsnorter on 27/09/2017 - 17:49

    Thanks for your comment. We have had a lawyer look at it now and there has been some to and fro in terms of redrafting some of the clauses.

    Out of interest, were there any specific clauses your studies directed you towards? Was your hypothetical based on Victorian law?

    The biggest thing we focused on was tightening the wording around the calculation of the deferred payment fee, which was a little ambiguous. Our success have been little though; the contracts are heavily favoured towards the retirement village owner and there is a massive imbalance of bargaining power.

    • 

      yyhazy on 28/09/2017 - 20:17

      +1

      The hypothetical we had was based on Tasmanian law, so there would be some difference in the application.

      The biggest issue we had in that assignment was whether the client could rely on the statements of the retirement village representative concerning the calculation of recurrent charges (I assume that it has the same meaning as your "deferred payment fee"), since those statements contradicted the clauses in the contract. The representative promised that the yearly increase wouldn't exceed 1%, but according to the calculation in the contract (which was also ambiguous) the increase would be around 3% to 5% per six months. The answer to this issue was no, because there was a entire agreement clause in the contract. By signing the contract, the client agrees that no communication outside of the contract was relied upon. As a result the court would not accept any previous communication as evidence. However this situation might not be common as it was a student assignment and the professor might have deliberately put it there so we would have stuff to write.

      Here are some of the other smaller issues I've mentioned in my answer that might or might not be of use to you: Whether the client could sub-let their apartment when they are not around (eg. overseas)/ How much would the client have to pay if they change their mind in the last minute/ How much would the client have to pay if they change their mind after moving in/ What happens if health issues arise in the future and the village could not provide the level of care that is needed/ What happens if there's dispute between residents of the village/ Under what circumstance could the village terminate the contract/ And finally what happens after the resident passes away. People don't like to consider this last issue, and as a result I've heard stories of relatives and families having to spend years fighting legal battles to settle with the village.

      Final bits of advice. In my humble opinion the priority of legal advice in your situation should be to address all the issues that might cause disputes in the future, even if the law is on your side. People go to retirement village to enjoy peace, not to waste time and effort fighting legal battles.

      • 

        ripsnorter on 28/09/2017 - 21:38

        +1

        Thank you so much for taking the time to provide such a detailed reply.

        Fortunately in Victoria recurrent fees (in our case the monthly "maintenance fee") can only increase in line with CPI, as specifically provided for under the Retirement Villages Act 1986 (Vic). The "deferred payment fee" I speak of is the exit fee which is a percentage taken out when the unit is vacated/resident dies and is the most significant cost.

        Your point about matching the contract to what the representative says is very pertinent - our negotiations were to tighten up definitions to ensure that the contract could be applied in the way that was being represented to us, particularly in respect of the calculation of fees. As you say, it is important to understand the perspective of the court, potentially years down the track after the contracts have been signed. We achieved amendments to the contract by explaining to the retirement village manager that we weren't trying to make them do anything they aren't already doing according to their representations to us, but we were trying to protect our interests should the management change or the retirement owner change and a new manager/owner proceed in the way most beneficial to their interests under what is written in the contract.

        The other issues you mention are all very important matters to consider and we have approached this move realistically, in that this will probably be the last place of residence my grandparents have.

        Once again thank you for your help, it sounds like we have taken a good approach and it sounds like you are a fairly switched on law student. All the best with your studies and future career.