One of the main considerations for any proposed resident of a retirement village is the cost associated with residing in the retirement village. Here is a summary of the costs you may have to pay.
- Ingoing Contribution. An ingoing contribution is an amount payable by a resident to the operator of the retirement village to acquire the right under the lease or licence to occupy the premises. This ingoing contribution may be paid in parts, for example a deposit and subsequently the balance being paid at a later date. An ingoing contribution does not include a waiting list fee or a recurrent charge.
- Recurrent Charges. Residents will pay recurrent charges which are used to meet expenses of the retirement village such as insurance or capital works costs and other general services for the village. Recurrent charges can be amended either at stated intervals, on stated dates according to a fixed formula. If there is no formula stated in the licence or lease, the operator of the retirement village cannot increase the recurrent charges more than once in a 12 month period.
- Departure Fees. When a resident moves out of the village, a departure fee is charged to the former resident. The departure fee is calculated based on the period of time the resident occupied the premises. The departure fee is deducted from the ingoing contribution and the remainder of the ingoing contribution is refundable. Retirement villages vary in how they calculate their departure fees and accordingly it is important for a resident to understand the formula that will apply on their departure.
- Costs associated with moving out during the Settling-In Period. Residents are given a “settling-in period” of 90 days from occupying, or receiving a right to occupy, the premises. A resident may, before the end of the settling-in period, end a village contract by permanently moving out of the premises or by providing written notice to the operator of the retirement village informing them that the resident wishes to end the contract. The resident will be entitled to the return of the ingoing contribution but may have to pay costs such as: fair market rent, costs of repairs for any damage and administration fees.
- Capital gains. If a resident is a registered interest holder under a retirement village lease, the resident should ensure they carefully consider whether the lease refers to capital gains apportionment. Capital gains will apply at the time the resident sells or re-lets the premises to a new occupant. The resident and the operator must share the costs of the sale in the same proportion as they share any capital gain on the sale. If applicable, capital gains will be calculated by reference to the amount a resident paid for the right to occupy the premises and the amount that the new occupant pays for the right to occupy the premises.
In Canberra, the Retirement Villages Act 2012 (ACT) regulates in respect of specific rights and obligations for residents and operators of retirement villages. If you require any assistance in this regard please contact us.