The NSW Department of Fair Trading has launched a web site: (http://www.fairtrading.nsw.gov.au/ftw/Tenants_and_home_owners/Retirement_villages.page?
that deals specifically with many of the issues residents have with retirement villages, especially the costs associated with leaving these villages. The Aveo stories on the Four Corners program was probably an incentive to get some information out to those living in or considering moving to a retirement village.
There is lots of information on the web site, but the most important aspects of the web site are the two Retirement Village Calculators that any resident or aspiring resident can use to check out the fees they will be up for. These calculators can be found from the main web site above or specifically at:
The basic calculator is for those considering a move to a retirement village. In step 1 you enter the postcode you would like to move to, then in Step 2 you enter how much you can pay for the retirement unit and how much you could afford for monthly recurrent expenses. The calculator then estimates what you would be paying in ongoing fees for a 7 year or 5 year residency. It also estimates how much you will get back at the end of the 7 year or 5 year residency based on estimated sale prices using 4.5% growth in prices, and an estimated departure fee based on the average in the industry.
The assumptions used by the calculator are:
– It is loan/licence contract (most common)
– Departure fee – 3% of entry fee per year up to a maximum of 12 years.
– Capital gains – split 50-50 between operator and resident.
The calculator warns that there may be other costs such as reinstatement costs to refurbish the unit, sales commission and advertising costs to resell the unit, and renovation costs. These costs can be significant.
There is also a detailed calculator for those who have received a disclosure statement from a retirement village operator, which you can obtain before signing a contract with the operator. Using this calculator you can provide more detail about the actual retirement village you are considering.
This web site is a good first step in providing information to potential retirement village residents and can be used by anyone in any state – just so long as you enter a NSW postcode (the calculator does not identify any operators in the postcode selected).
However, I wonder how much these calculators will be used by the age group most likely to enter retirement village contracts. I think they are more likely to rely on lawyers and accountants to get a quick contract signing without too much consideration of what happens when the person leaves the village – usually to go to a nursing home. It is at this time that the departure fees and costs loom large.