Wealth
Consider all the costs of retirement living options
Regardless of the retirement accommodation you choose, you’ll need to budget for incoming, ongoing, and outgoing costs, writes DON MACPHERSON.
Whether it’s lease, licence or manufactured home, there is always a purchase price.
With retirement villages, you normally acquire a lease, or a licence – both create a right to reside, but do not give ownership in the traditional sense.
Even though they do not involve ownership, the incoming acquisition costs can be considerable, which must be funded through the sale proceeds of your home or savings or a combination of both. You cannot borrow against your lease or licence as security.
In manufactured home parks (relocatable homes) you buy the house but do not own the land. There is an acquisition price that must be paid, to either previous owner or resort owner.
Once the accommodation interest is acquired, there will be monthly charges. These are costs associated with living in the community. These charges are usually called general services charges (for retirement villages) or site fees (for manufactured home parks).
There are also the usual living expenses such as electricity and water.
When moving on from retirement accommodation (as we all must, one way or the other) there are outgoing expenses.
With retirement villages this is the deferred management fee, or exit fee, which is often 35 per cent of the purchase price. Often there are rectification or refurbishment costs that are factored into the initial contract, but which were overlooked at that time.
With manufactured homes there is usually a requirement to repaint the home every 10 years. As well, there are costs associated with the sale, which can involve valuation fees in some instances.
The costs of any accommodation in retirement need to be fully understood when entering into the contract. Much heartache has arisen when costs weren’t carefully considered at the outset.
Retirement village and manufactured home contracts are complex, vary from village to village, and the bundle of documents often runs to more than 100 pages. Expert advice is needed to navigate the challenges they entail.
Don Macpherson is an expert in retirement village and manufactured home contracts. Visit brisbaneelderlaw.com.au or call 1800 961 622
