Moving out of the family home is an emotional time. It can also be incredibly daunting, especially when it comes to deciding where to move, and sorting through the myriad options available for downsizers.
From upmarket new apartment complexes to house sharing (if you’re open to sharing your space and are keen to make friends), the options are endless. Deciding what’s right for you comes down to what type of lifestyle you’re looking for and, of course, how much cash you have to spend.
Today, the two most popular options are still retirement villages and lifestyle communities. There are a few key differences to consider, however, including outgoing costs, upfront fees, facilities and contracts. We’ve taken a look at what you need to know.
Lifestyle communities (also referred to as land-lease communities) and retirement villages have several elements in common. Both typically offer communal social and leisure facilities, a built-in social calendar of activities for residents, enhanced home-security features and low-maintenance accommodation.
Among the diversity in housing available in lifestyle communities and retirement villages across Australia, there are even options for co-housing, should you wish to save on living expenses by sharing your home with another person.
The main difference between retirement villages and lifestyle communities are the contracts and fees that residents are required to pay. Retirement village contracts can involve one or more ownership structures, including strata title, leasehold and rental.
“In a retirement village, the ingoing is the price you pay for your right to occupy your home and use the common facilities, typically on a leasehold or licence arrangement,” Rachel Lane, principal at Aged Care Gurus, explains. “Where the home is in a strata title village, then the amount you are paying is to own the home and have use of the common facilities, often through an owner’s corporation. In the case of strata title, you may need to factor stamp duty into the ingoing costs.”
It’s also worth noting that when you sell your home, under many retirement village contracts, you’ll also be liable for a deferred management fee (DMF), or exit fee, which is usually set as a percentage of either your original purchase price or the sale price. These percentages can range from about 25 per cent to 40 per cent, depending on the village provider and when you bought into the village, and are designed to cover the cost of creating and maintaining the village’s communal facilities. The DMF effectively reduces the capital you’ll receive upon the sale of your home in the village.
Retirement village providers also often have residential care offerings either on-site at their villages, where an aged care facility is on the same property, via home care services provided to village houses, or at a partner aged-care facility nearby. This can be hugely important if you have any health issues or would like the peace of mind that comes from knowing support is on hand if and when you need it.
With lifestyle/land-lease communities, the situation is simpler: the price you pay upfront is the purchase cost of your home, plus the cost of leasing the land it’s on. However, the ongoing site fees you’re obliged to pay may be higher than the ‘general service charges’ paid by retirement village residents. This is because the companies that own land-lease communities are legally permitted to profit from their general running fees, and retirement village providers are not.
However, lifestyle village residents usually face a lower — or no — DMF when they choose to exit their residence, compared with those living in retirement villages, who are required to pay an exit fee. Another benefit to land-lease communities is that pensioners often qualify for Rent Assistance from the government, as you own your home but lease the land it sits on.
And while, traditionally, lifestyle communities did not offer the same continuation of care as retirement villages, it’s important to note that more communities are introducing aged care and home care options.
While it’s okay to consider these differences between lifestyle communities and retirement villages, there are plenty of other factors you need to bear in mind before you set your heart on one. Perhaps the most important factor in your decision process should be to find a home in a location you are either familiar with or happy to live in. For example, is it close to family and friends? Are there essential amenities nearby, such as a grocery store, cafes or outdoor areas if you like to keep active?
It’s also crucial that you consider whether other aspects of your life will fit into your new home. For example, if you have a pet, does the village or community allow animals? Another factor that’s often very attractive to potential residents is a garden, so you may need to look around before you settle on the perfect spot.