Our Financial Planning Associates remind us that whatever Retirement Living Accommodation option you choose, there are usually costs Incoming, Ongoing, and Outgoing, all of which must be budgeted for.
Whatever Retirement Accommodation is chosen (Lease, Licence, Manufactured Home) there is of course the initial purchase price of the interest you acquire.
With Retirement Villages you normally acquire a Lease, or a Licence – both create a right to reside, but do not give you ownership in the traditional sense. Even though they do not involve ownership, nevertheless the incoming acquisition costs can be considerable, which must be funded through the sale proceeds of your home, or savings, or a combination of both. You cannot borrow against your Lease or Licence as security.
With Manufactured Home Parks (Relocatable Homes) you buy the house, but do not own the land. There is an acquisition price that must be paid, either to the previous homeowner, or the Resort Owner.
Once the accommodation interest is acquired, there will be monthly charges that must be paid. These are costs associated with living in the community. These charges are usually called General Services Charges (for Retirement Villages) or Site Fees (for Manufactured Home Parks).
As well of course, there are the usual living expenses one must meet, including electricity, water, telephone etc. which are based on a user pays system.
When one moves on from the Retirement Accommodation (as we all must, one way or the other) there are outgoing expenses that must be dealt with. With Retirement Villages this is the Deferred Management Fee, or “Exit Fee”, which is often 35% of the initial incoming “purchase price”.
Often there are Rectification or Refurbishment costs that are factored into the Initial Contract, but which were overlooked at that time. With Manufactured Homes there is usually a requirement to repaint the home every 10 years. As well, there are costs associated with the sale, which can involve valuation fees in some instances.
The costs of any accommodation in retirement need to be fully understood when entering into the contract. Much heartache has arisen where careful consideration wasn’t given to all the costs at the outset.
Retirement Village and Manufactured Home Contracts are complex, vary from Village to Village, and the bundle of documents often run to more than 100 pages. Expert advice is needed to navigate the challenges they entail.
Sunshine Coast Elder Law are experts in Retirement Village and Manufactured Home Contracts. Contact Don Macpherson on 1800961622 or visit www.sinshinecoastelderlaw.com.au for expert guidance on your Retirement Living decisions.
