You could be forgiven for thinking that entry into a retirement village is all doom and gloom, especially if you have seen recent articles in the media (including Four Corners, titled: ‘Bleed Them Dry Until They Die: The retirement villages ripping off retirees’).
However, it doesn’t have to be, and definitely is not, all doom and gloom. But, it is important to be clear on what you are getting yourself (or your parents) into.
Here’s what you need to know when considering the move into a retirement village in the ACT.
A retirement village is not the same thing as an aged-care facility
Put simply, the difference between the two is that aged-care facilities provide care, retirement villages do not (but it is commonplace for facilities to offer both retirement village and aged-care accommodation options at the same location).
Aged-care facilities are regulated under federal law which sets out a procedure to assess the eligibility of potential residents based on their health needs, and the facility’s capacity to provide the level of care that is required. The fees for aged care facilities are regulated under this legislation, with the effect that some fees are capped and/or means-tested.
Retirement Villages are regulated by State or Territory laws. Entry into a retirement village in the ACT does not require any assessment as to eligibility of your medical needs and the fees are determined under the Agreement between the facility and the resident (in accordance with the legislation).
Retirement villages – what exactly are you ‘buying’?
You are buying a licence to occupy a premises. You are not buying the property itself. This means that you do not own the premises but merely have the right to occupy it in accordance with the terms and conditions of the Agreement. It is not an investment.
What fees can I expect to pay?
Generally speaking, when you enter a retirement village in the ACT you can expect to pay:
- A lump sum upon the commencement of the Agreement;
- Mandatory and optional fees and charges throughout the term of the Agreement (service fees, care fees, for example);
- Rates and utilities;
- Insurance; and
- Interest on overdue payments.
Waiting list fees are prohibited under the legislation.
Locked in for life? Getting out of the Agreement
The Agreement will set out the procedure to be followed if you wish to terminate your ‘right to occupy’. Generally, the amount of money that may be refunded will be dependent on the time that has passed since the Agreement commenced. It is usual for agreements to have:
- A short cooling off period, where you are entitled to have all monies paid refunded;
- A settling-in period of 90 days, where you are entitled to have the majority of monies paid refunded; and
- Any periods thereafter are generally subject to more significant deductions and the refund to which you will be entitled (called ‘departure fee’) will in most cases be less than the sum that you paid to enter the retirement village (for example, your departure fee may be the lump sum payment less 5% for each year the premises is occupied).
All retirement village facilities offer different terms and conditions.
At Chamberlains we review and provide advice on your retirement village agreement to ensure that any decision you make about the next phase of your life is an informed one.