After the scandal of 2017, fees in retirement villages are a hot topic. And with the huge variation between the price and type of fees charged from village to village, it’s easy to see why.
The planned changes to legislation will hopefully bring more consistency and transparency to the fee structure of retirement communities. In the meantime, it’s important to carefully consider the cost of upfront, ongoing, and exit fees when comparing villages to avoid any unpleasant surprises.
With so much inconsistency in fees, it’s not easy to do a simple comparison. So, to help you get started, we’ve put together this quick guide outlining the fees typically payable in lifestyle and retirement villages.
When you move to an over-55s community, you pay a purchase price to buy the home of your choice. In some villages (including ours), you can either choose to buy an existing home or build a new one. The amount you pay depends on the location, facilities, features, age and condition of the home. As a guide, it can range from around $200,000 up to $1,000,000 in very affluent areas.
If you buy an existing home at our village, the price range is $165,000 – $250,000 (at the time of writing). If you build a brand-new home, we offer two designs that are perfectly suited to our lots, the Hazelwood ($220,500 at the time of writing) and Rawson ($225,500 at the time of writing). Alternatively, you can also custom design your own.
It’s important to note, that purchasing a home in a retirement or lifestyle village means you own the house and rent the land. At our village, your home is situated independently on a fenced block. You also have the freedom to decorate your home and garden as you like to make it your own (within reason of course!).
Depending on the village, ongoing fees can include rent, maintenance, rates and administration fees and are usually payable monthly. This can add up fast so be sure to do your calculations to find out if it’s affordable.
At our village, the rental fee is $135.50 per week (at the time of writing). Some other retirement villages can charge residents anywhere up to $1000 per month. Unlike most other retirement villages, we do not charge municipal rates or maintenance fees, which keeps our rental fee down and equates to substantial savings every year.
Exit fees (also known as deferred management fees) are complicated and can be hard to get your head around. There are different structures for how they are charged, so it’s highly recommended you seek legal advice before signing any contracts.
As an example, a one-off charge could see you handing over 20-30% of the sale price to village management. If your fee is payable annually, it may cost you 3%-5% of the purchase price for an agreed period of around 10 years. You may also need to sacrifice some of your capital gains to management or pay for refurbishments before you can sell which can further eat into your potential profits.
At Lifestyle Villages Traralgon, we keep it simple and fair and do not charge deferred management fees of any sort. You keep 100% of the profits of the sale if you decide to sell which makes a big difference to your financial position.
Final Word on Lifestyle Village Fees
Before you sign any contract, be sure to examine the fees payable closely. Make sure you understand what you’ll be required to pay upfront, monthly and if you move out. That way you can be confident it fits within your budget.
Unfortunately some villages do take more than their fair share in fees. But there are also villages that offer all the benefits of retirement community living, minus the financial stress. So, do your research, comparisons and seek professional advice. You can then feel confident your move suits not only your lifestyle, but also your financial circumstances.
Over to You
Do you have a question about lifestyle village fees that we haven’t covered here? We’re happy to help – simply post a comment below or get in touch on 03 5174 2384.
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.