When it comes to over-55s communities, there are two main options available – retirement villages and lifestyle villages.
Because both generally offer communal facilities, enhanced security features, opportunities for socialising, low-maintenance accommodation, and a host of other lifestyle benefits, they are often thought of as the same thing – but there are some very important differences between the two.
Lifestyle vs Retirement Villages
If you choose to live in a lifestyle village, your legal rights, contractual obligations and the fees you pay will be vastly different from those of a retirement village resident.
That’s why it’s essential to do your research and seek expert advice before you sign any contracts to make sure you find the right fit. So, to get you started, here are three key differences between lifestyle and retirement villages to help you make the right choice.
Because of the different legal structures that have developed within retirement communities over the years, the legislation that applies to retirement villages can be complex. And to further complicate matters, each state and territory in Australia has its own specific retirement village legislation, which covers retirement villages but not other retirement communities such as lifestyle villages.
For example, in Victoria retirement villages come under the Retirement Villages Act 1986 while lifestyle villages are covered by the Residential Tenancies Act 1997. This means the rights, responsibilities and protection for residents in retirement villages are quite different to those who live in a lifestyle village – so be sure to do some research into the legalities behind both acts before you decide which is the right option for you.
As mentioned above, there are a number of different legal structures in use within retirement communities and these form the basis of the various types of village contracts. There are significant differences between retirement and lifestyle village contracts, both in the type of sale or lease agreement you are entering in to, and in your obligations and costs when you move in, during your tenancy and when you exit.
Retirement village contracts are usually either a strata title or leasehold, and relate to the building. Lifestyle villages are more like a rental agreement as you purchase the house and rent the land. It is absolutely essential to get legal advice when reviewing any retirement community contract as they can be lengthy, complex and have far-reaching consequences on your lifestyle and finances both now and in the future. Be 100% certain that you are happy with all the details before you sign.
Your contract will set out the fees payable, so be clear on exactly how much is required up front, and ongoing on a weekly, fortnightly or monthly basis. Be especially wary of fees that need to be paid when you or your family decide to sell – commonly called deferred management fees or exit fees. Each village will have its own fee schedule, but in most cases, a retirement village will charge an incoming fee, ongoing maintenance fees and a deferred management fee when you exit, which could be up to 30% of your sale price. On the other hand, most lifestyle villages (including Village Lifestyle Park) do not charge deferred management fees. Instead, you’ll pay a purchase price on your house and ongoing rental on the land – but importantly if you choose to sell, all of your sale proceeds are yours to keep, and you do not need to hand over a large percentage to village management.
If you’re considering moving to an over-55s community, it’s vital that you are clear on the differences between lifestyle and retirement villages before you make any decision. Know your legal rights and obligations, understand your particular contract and be clear on the upfront, ongoing and exit fees that apply. Put in the time and effort to seek advice before you sign to make sure your choice is a good fit for your lifestyle and your finance and you’ll set yourself up for a long and happy retirement in the right place.
Over to You
Confused about the difference between a lifestyle village and retirement village and have a question? We’d love to help!
Want to know more about deferred management fees and other traps related to lifestyle villages? Download our FREE guide, 20 Questions You Must Ask BEFORE Choosing a Village.