Before becoming emotionally attached to a Retirement Village it’s important to consider your budget.
Our residents have told us when they began to consider downsizing they considered options such as do I stay in my home, sell my home to move into a smaller home or strata titled apartment block, or consider Retirement Village living.
There are many considerations attached to each of these options. It’s a personal choice. Whether it’s a Retirement Village or another option, think of the decision as a lifestyle choice and not an investment decision.
Your lifestyle and the costs associated with it should be looked at as a whole, not just the purchase price of the property.
To determine if a Retirement Village makes sense for you financially, we will un-complicate these costs by breaking them down into ingoing, ongoing and outgoing.
The costs of entering a Retirement Village vary depending on the type of property and services offered. At Bethanie, the majority of our villages are available to purchase through a lease for life arrangement.
As a new resident, this means you’ll pay an upfront entry fee. This is in the form of a 60 year lease agreement and gives you the exclusive right to occupy your home and use the village common facilities until you decide to leave. And best of all, you don’t pay government stamp duty which is a significant saving.
The entry fee is usually set below the price you would pay if you bought a similar strata titled apartment or villa outside of a Retirement Village. The village operator recovers this income when you leave the village through the Deferred Management Fee (refer to the Ongoing costs). This allows you to have more money available to spend during your retirement without having to sacrifice lifestyle. As many of the lifestyle amenities are also included in the village, you won’t have to worry about budgeting for lawn bowls, swimming pool access, men’s sheds, social clubs and transport costs to and from your home. In addition to the entry fee, you’ll need to pay a small fee for the preparation and execution of your lease agreement.
During your stay you’ll pay a weekly village levy to help cover the maintenance and running costs of the village. This is similar to the costs you would be required to pay in a strata titled apartment or villa. Depending on the age of your current home, the levy may be less than the costs of maintaining your home.
The levy includes ongoing repairs, cleaning and gardening, building insurance for your property, shire and water rates, security and your personal emergency alarm system.
You’ll also need to consider your personal living costs including utilities, contents insurance, groceries as well as extra lifestyle expenses like travel.
When it’s time to leave your home, there are costs associated with selling the property to a new resident. As with all property sales, you’ll need to pay a real estate agency selling fee and marketing charges. The value your home is sold for is determined by market forces and you’ll receive the majority of the sales value achieved.
There is also an amount that is paid to the owner on exit for the facilities you have used and enjoyed whilst living at the village, however were not fully charged for on entry to the village. This is called the Deferred Management Fee (required by the Retirement Villages Act).
In addition to the DMF, a contribution is made to the Reserve Fund which is set aside for major capital repairs in the village. Unlike in a strata titled villa or apartment or a house where unexpected major repairs might be a significant and unmanageable cost to your budget, the Reserve Fund provides you with absolute peace of mind during your time in the village. All major repairs are funded from the Reserve Fund.
Both the DMF and Reserve Fund are usually calculated as a percentage each year you stay in the village, however are only paid from the sale proceeds of your home when you leave the village.
You’ll also need to consider restoration works to your home prior to it being sold to ensure it is in the similar condition to when you first moved in. These costs may include painting, new flooring and other minor items and are similar to what you would ordinarily spend when preparing a house for sale.
Talk to our team
Call 131 151