Selling up the family home and buying into a retirement village is a big decision for any ageing person or couple. People mostly understand these days that it’s generally not a particularly good financial investment. But that has to be weighed against the excellent lifestyle opportunities retirement villages can offer.
In short the use of ‘exit fees’, more correctly described as ‘deferred management fees’, allow capital rich retirees to enjoy a standard of living now that their income would not otherwise support, on the basis that they pay for it later from their capital when they exit. Exit fees, along with the legislated right to enforce a minimum age limit, are the defining characteristic of a retirement village, as compared to other clustered communities aimed at retirees but not registered under the Retirement Villages Act.
While it’s the exit fees of departing residents that mean there’s money coming in to keep up all the nice extras that attracted you there in the first place, that doesn’t mean you shouldn’t seek out the best deal for yourself going in. There is no set basis or standard for calculation of exit fees, and each contract, even within a village, can say something different. There is however a requirement for disclosure of all this stuff in a Public Information Document or ‘PID’. Can I suggest that the only way potential purchasers can decide if a particular contract is right for them is to get the ‘PID’ and consult a solicitor who regularly deals in the area.
Julian Porter is Principal Solicitor of Suncoast Community Legal Service.
This column contains legal information only. Legal advice should be sought in relation to individual circumstances.