Retirement village contracts - buyer beware
COTA NSW strongly advises prospective retirement village residents to not be pressured into a quick decision when it comes to choosing a retirement village.
Taking your time will almost always result in a better outcome.
“Find a solicitor who specialises in retirement village contracts and seek financial advice from an accountant or financial advisor who also has Retirement Village experience,” urges COTA NSW co-acting CEO Lisa Langley.
“In RV contracts, it’s not just like purchasing a house. There are always a number of ongoing fees and charges and more importantly, there are almost always substantial exit fees (or “deferred” fees) when you leave.”
“Don’t expect to make money when you buy into a retirement village. Expect you will likely leave with less money than you started with,” she explains.
“This is an aspect of RV contracts on which clear, well informed independent advice is vital.”
The retirement village operator Aveo was the focus of the ABC’s Four Corners program after current and former residents shared their personal stories of complex contracts and confusing marketing.
“While many retirement village residents regularly report they are happy with their circumstances, there are others who have been badly affected by disreputable or confusing practices that are not focused around residents’ best interests and from resident perspectives.”
Despite NSW having a standardised retirement village contract that must be used by all operators, misleading marketing from some operators and complex contracts and fee structures remain.
COTA NSW believes that more work needs to be done to reduce the complexity of retirement village contracts and fee structures, and better support for retirement village residents needs to be provided.
“We find that people are confused about retirement villages. Firstly, retirement villages are not the same as aged care facilities - they are not obligated to provide care, and you will pay extra for it.
"If you need care you also do not have to purchase from the Village operator, you can buy it in from another provider.
"Secondly, most retirement village units are leased, not bought. This means people don’t have the same control over the unit while living in it as if they owned it in the community; and often don’t have control over sales processes later.
"It’s a different set of arrangements which is partly why contracts tend to be much more complex and outside most residents’ previous experience.
“Retirement villages can offer a relatively cheap housing alternative when compared to other options in the market on entry, but ongoing fees and complications when exiting a village can cause additional costs and unexpected and unwanted distress and anxiety."
COTA NSW has urged the NSW Government to ensure there are a range of housing options available to older people, and to provide adequate protections to people at the most vulnerable point in their lives.
See the ACCC Retirement homes information page at https://www.accc.gov.au/consumers/health-home-car/retirement-homes
4 July 2017.