About retirement living

Retirement living is a popular accommodation choice for many people over the age of 55. Retirement living options allow people to maintain their independence in a supportive and secure environment without the worry of maintaining a large family home.

Retirement living can be confusing for people to understand at first as there are a range of retirement living options; each with their own tailored set of services, environments and financial obligations. As well as this, the terms used to explain the different retirement living options can be used interchangeably (i.e. There might be more than one term used to describe the same accommodation type).

For example, a 'serviced apartment' is often referred to 'assisted living' regardless of whether you're seeking a fully independent lifestyle within a secure environment, or seeking partial assistance with some areas of living. Undoubtedly, whatever your needs there will be a retirement living option suitable for you.

The Aged Care View website aims to provide clear and easy to understand information about the different retirement living options. Combined with the search options and individual listings (including virtual tours), finding a retirement living option has never been so easy.

Legislation

Each state and territory has enacted specific legislation that regulates the operation of retirement villages. The legislation in each jurisdiction is different and has its own definition of what is and what is not a retirement village. In some cases the legislation applies differently to different legal structures and contractual arrangements.

Particular legal structures and contractual arrangements may also attract the application of other legislation, such as strata title, community title, manufactured home/tenancy legislation, companies and securities.

Retirement living in Victoria is regulated by The Victorian Retirement Villages Act 1986.

You may also like to view the following regulations:

• Retirement Villages (Records and Notices) Regulations 2005
• Retirement Villages (Contractual Arrangements) Regulations 2006

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Dwelling types

Independent living units and villas

Independent living units and villas are ideal for individuals who enjoy having the freedom to take care of their daily activities, with the advantage of having access to community facilities, beautiful gardens, maintenance and security.

Independent living units are designed to have everything you would normally have in your home, including a kitchen, living and dining areas, bathroom, laundry and bedrooms. Some units also have an external garden area, courtyard and garage. In addition to this, an individual residing in an independent living unit or villa will usually be eligible for additional government funded services such as home help, meals on wheels and respite services via the local council. This means an individual can maintain their independence for longer in their own home environment.

Serviced apartments

Serviced apartments, sometimes referred to as 'assisted living', automatically provide access to services to assist with daily living activities such as cleaning, laundry and preparing meals. Following an assessment to determine the level of assistance required an individual's specific needs will be catered for accordingly. The level of assistance offered will vary for everyone and individual assessments will be conducted by a nominated village coordinator. Extra care services can be tailored to suit a resident's health care needs if required, but may incur an extra fee.

Serviced apartments usually offer a kitchenette, living area, bedroom/s and bathroom. They often offer additional extras such as hand rails and emergency call system. An emergency call system enables residents to call for help in case of an emergency and families are ensured peace of mind knowing that personal care staff are on call 24 hours a day.

Flexi units

You may hear the term 'flexi units' being referred to, indicating a retirement living option which provides a combination of the above. These units provide independent living with the option to take up assistance with additional services such as meals, laundry and cleaning. These options are usually carried out on a pay-per-need basis by the individual. Flexi units often include a lounge and dining area, bedrooms, bathroom, kitchenette and laundry.

Extra care services

'Extra care services' are offered in some retirement villages. These villages are immaculately presented and maintained offering retirement accommodation in addition to the choice of an extensive range of extra care service options; ensuring each resident's specific requirements are well catered for. Village staff put together a tailored care plan or care package to assist with a variety of needs which may include personal grooming, showering and dressing (Services like these are usually provided through community care organisation. E.g. St Luke's Nursing, Blue Care).

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Legal structures

There are multiple legal structures that apply to retirement living options. Different structures can have different implications and raise different issues in terms of applicable legislation, stamp duty, GST, service charges, responsibility for refurbishment and capital replacement costs, security of tenure, operator default, termination, vacating the premises, capital losses and credit risk.

Some retirement villages have units held under a mix of contractual arrangements; for example, one resident might own a strata-title unit, while the person living in the next unit has a license agreement.

Retirement village contracts are not the same as ordinary residential property contracts. The law requires that you be given a retirement village contract at least 21 days before you sign. However, you can take more time to consider your decision.

Most commonly retirement villages will apply one or more of the following legal structures.

Long-term lease or license

Under this structure, you pay an ingoing contribution and in return receive a lease or license to live in a particular retirement village unit for a period ranging from 49 to 199 years. These arrangements require an upfront capital payment.

Strata title

Strata title is a common contract offered by retirement villages run for profit. You pay the agreed purchase price to the unit owner, usually through their selling agent, such as the retirement village operator or an estate agent. This means you can occupy the premises and become a member of the owners' corporation (formerly body corporate), as with any other strata-title scheme. You will have to pay owners corporation fees while you own the unit and you may also have to pay goods and services tax (GST) if the unit is new and you are the first owner.

As a strata-title unit owner, you will be registered as the owner of the unit on your title deed held at the Land Titles Office.

Unlike other strata-title schemes, buying a retirement village unit is conditional on the retirement village operator approving you as a resident and the signing of a retirement village contract with the village owner.

Company title

Under this arrangement you buy shares in a company that owns a retirement village. The shares give you the right to occupy a particular unit in the village. A board of directors, appointed by the shareholders, operates the retirement village and you will be required to comply with the company's constitution. If you leave the retirement village, you will be entitled to receive the sale price of the shares at settlement, less any outgoing deductions.

Company title is a complex area of law that was not primarily developed for private residential accommodation. It is important to understand that, under this arrangement, you are not buying property, but shares in a company.

Unit trust

This arrangement is similar to a company-title scheme, except that you buy a unit in a trust that carries an entitlement to occupy the unit. The retirement village is legally owned by the trustee, who holds it for the benefit of the unit holders in keeping with the terms of the trust.

As with company title, if you leave the retirement village, you will be entitled to receive the sale price of the unit in the trust at settlement, less any outgoing deductions.

Conventional lease

Conventional lease structures require regular rental payments instead of an upfront capital payment.

Periodic tenancy

Periodic tenancy arrangements are sometimes used by not-for-profit organizations running community-based villages. A periodic tenancy is a lease (written or verbal) between the resident and the owner, in which there is no fixed date for the end of the lease. This means the agreement operates from rental period to rental period.

In some cases you pay an ingoing contribution, some or all of which may be refundable at the end of the tenancy period. Paying rent gives you the right to live in the unit and use any common facilities.

Manufactured home

Manufactured home structures offer ownership of a manufactured home and a lease or license to occupy a site.

Legal advice

Before signing, take all documents about the retirement village to a legal practitioner or financial adviser who understands the legal and financial implications of retirement village contracts. You can find legal practitioners through the Law Institute of Victoria's legal referral service and financial planners through the Financial Planning Association of Australia.

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Financial considerations

Fees and charges

Waitlisting fee

Some retirement villages have waiting lists, which are available only by paying a joining fee. When looking into this option questions that should be asked of the village owner are:

• What is the fee amount?
• Do you get this payment refunded upon entering the village?
• What is the average waiting period?

Ingoing contribution fee

The ingoing contribution fee or 'entry price' is the largest single payment that you will be likely to pay, this also secures your right to occupy your premises. This upfront payment will be set out in your contract, and will be dependent on the legal structure that applies. For example, a conventional lease does not require an upfront ingoing contribution fee, whereas under strata title it will be required. The ingoing contribution fee is usually refundable either in part or in full once you have left the village. It is important to clarify this with the village owner before paying said fee.

Recurrent charge or maintenance fee

A recurrent charge or maintenance fee will usually be expected to be paid to your retirement village which ever village or legal structure you choose. Payments are generally made either fortnightly or monthly. This cost will cover managing the facility, including: staff member's salaries, providing additional services such as an emergency call system, and maintaining the facility and common areas such as the gardens and recreational facilities.

Special levy

A special levy is also something to look at in your contract. This is where the retirement village may require an injection of funds for capital expenditure in addition to ongoing maintenance. This may be required for an unexpected major repair. The Retirement Villages Act 1986 allows the operator to seek this special levy if certain conditions have been met.

Departure or outgoing fees (deferred fee)

Departure or outgoing fees, sometimes referred to as a 'deferred fee' is usually required when leaving the village. This fee could be part of your purchase price that may have been deferred until the end of your occupancy or it could be a set amount of your ingoing contribution, which may have been outlined as non-refundable in your contract. There are different structures to departure fees and they can produce very different financial outcomes. Facilities may offer flexibility on the amounts payable for ingoing contribution fees and departure fees. For example it may accept a lower entry price up front in return for a larger departure fee at the back, which may suit some people.

Financial advice

Before signing a retirement village contract, take all documents about the retirement village to a legal practitioner or financial adviser who understands the legal and financial implications of retirement village contracts. You can find legal practitioners through the Law Institute of Victoria's legal referral service, and financial planners through the Financial Planning Association of Australia.

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