When it comes to trading in your treasured family home, the hardest part of the process is often deciding where to move on to. And the choice isn’t made any simpler by the myriad options that are available to over-60s who are looking to downsize nowadays.
From neat little flats in flashy new apartment complexes to house shares where you can meet new friends, the opportunities really are endless, it all depends what type of lifestyle you are looking for and how much cash you’re willing to part with. Despite there being more choice out there than ever before, the most popular options among older Australians exiting the family home are still retirement villages and lifestyle communities.
So before you decide which would best suit your needs, here’s everything you need to know about lifestyle communities and retirement villages – from differences in outgoing costs and upfront fees, to facilities and contracts.
Lifestyle communities – also referred to as land-lease communities – and retirement villages actually have several factors in common. Both usually 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 land-lease 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 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 percent to 40 percent, 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 should you need it.
With 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 sits on. However the ongoing site fees you are obliged to pay may be higher than the ‘general service charges’ paid by 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 deferred management fee (DMF) when they choose to exit their residence, compared to those living in retirement village 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 that it sits on.
And while, traditionally, lifestyle villages did not offer the same continuation of care as retirement villages, more communities are introducing aged care and home care options.
While it’s okay to consider the differences between lifestyle villages and retirement villages in order to inform your decision, there are also heaps of other factors that you need to bear in mind before you set your heart on a specific community. Perhaps the most important factor in your decision process should be to find a village in a location you are either familiar with or happy to live in. For example, is it close to family and friends? Are their essential amenities nearby, such as a grocery shore, 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 allow animals? Another factor that is often very attractive to potential residents is a garden, so you may have to look around before you settle upon the perfect spot.