Retirement villages are a great option for people who want a degree of independence in retirement but with the added benefits that come from communal living. There can be significant differences between retirement villages in terms of facilities and costs and it pays to do your homework before signing an agreement so as to avoid making costly mistakes.
There are four basic legal titles commonly used for retirement villages; licence to occupy, unit title, cross lease and lease for life. The type of title will largely determine how much it costs you to buy and live in your retirement unit. There are three types of cost that you will need to consider; the initial cost of buying your unit, the costs of living in your unit and the costs involved with selling your unit.
In many cases, the initial amount you pay gives you the right to live in your unit, but does not buy the unit itself. While you are living in the village, you will need to make regular payments to cover such expenses as rates, gardening, maintenance and healthcare. There are differences between villages as to what these ongoing fees cover. When you sell your unit, you may be required to pay for refurbishment of the unit to a certain standard as well as marketing and selling costs. In some cases, you may have no control over the sale process and when you sell you may not get the benefit of any capital gain on the unit.
Before you purchase, the retirement village must give you certain legal documents which set out your rights, benefits and costs and you are required to get independent legal advice on these before signing an agreement.