Big village provider unveils payment options without hated exit fees

Lendlease has thrown down the gauntlet to its retirement village competitors, by reportedly introducing a payment option without exit fees attached.

Previously, the property giant, one of the big Australian village providers alongside Aveo and Stockland, had only offered payment models that included exit fees, also known as deferred management fees. But the Sydney Morning Herald reports that Lendlease had now introduced three new funding options for 15 of its 71 retirement villages.

“Lendlease would still offer its existing contract, whereby a person buys a unit then pays a deferred management fee at the end,” the SMH explains. “The three new options include a pre-paid plan, a refundable contribution and a pay-as-you-go model.”

The MD of retirement living at Lendlease told the newspaper that it introduced the new options because many Baby Boomers that were keen to buy into its villages had sufficient cash to pay all their costs upfront and didn’t like the prospect of possibly having a large debt at the end of their stay or of leaving a reduced inheritance for their children.

Read more: Exit fees and super profits: The truth about retirement villages from Aveo  

More details on the Lendlease payment options are included here in the SMH story. 

The retirement village industry, and Aveo in particular, was savaged in a series of stories by the SMH and the ABC in 2017, which accused the company of being rapacious in its application of exit fees – charges Aveo denied.

While the company claimed that the media outlets had been selective in their reporting of residents’ complaints, the stories did highlight the loathing many Baby Boomers had for exit fees, which were introduced for a previous generation of retirees who tended to be asset rich but cash poor, so preferred to use some of the capital from the sale of their village property to cover the fees accrued while using the village’s services during their residence.

The distaste for exit fees existed despite research commissioned by the Property Council of Australia – which is the peak body for corporate retirement village providers – that found it was cheaper to access such services via a village than it was to purchase them on the open market from one’s family home. 

Read more: It’s actually cheaper to downsize to a retirement village: Report

It was not clear from the SMH story how village providers would ensure those who elected to pay upfront were paying a fair proportion of these service fees when compared to existing residents with exit fees built into their purchase contracts. 

Would you consider living in a retirement village? Does the prospect of exit fees put you off?