As people get older, and especially if they are living alone, they often start to ask themselves: SHOULD I MOVE INTO A RETIREMENT VILLAGE?

7 GREAT REASONS TO MOVE INTO A RETIREMENT VILLAGE

•     you want to live near people of a similar age (quieter, same interests)

•     you want to live near services and facilities targeted towards older people

•     you want relief from the rigours of maintaining a house and garden,

•     you can come and go from your place without worrying about it

•     you hope and anticipate that neighbours will “look out for each other” and

•     you will be less of a burden on your children and friends

•     you have been told that NSW legislation protects residents of retirement villages

NSW PROVIDES COMPREHENSIVE PROTECTION FOR RETIREMENT VILLAGE RESIDENTS

NSW Fair Trading supervises retirement village operations.. It has produced an excellent reference for someone considering moving into a retirement village.

The information NSW Fair Trading provides gives an excellent background but in the end you need advice about the particular contract you are considering signing. Retirement Village contracts are lengthy and complex, it is advisable to get a solicitor to read it for you and to provide a concise and comprehensible explanation of what you are getting yourself into. You can then make an informed decision about whether you should move or not.

Flanagan Legal Newcastle provides such advice:

Clients to whom Lynn Flanagan has given advice have stated: “ Thank you so much for your help with our completion of the paperwork and paying of the deposit for our new apartment in the retirement village.  Your knowledge of the Retirement Village Act was also invaluable as it helped us to make a much more informed decision about going ahead. We were extremely happy with your advice and prompt assistance.  We also greatly appreciated your reducing the massive amount of reading we had to do into a very compact number of pages which highlighted the most important points particularly in relation to living in an over-55 development.Thank you once again and it was a pleasure working with you”

11 THINGS YOU SHOULD CHECK OUT BEFORE YOU SIGN A SPECIFIC RETIREMENT VILLAGE CONTRACT

1.          approved plans for future development or expansion of the village: it Is a village now but will it become a metropolis?

2.          a site plan of the village: what are the available facilities amd where might your residence be located

3.          a sample contract: you need to have  some idea what you might be getting into: this the time to get legal advice on the implications

4.          audited accounts: check for recurring substantial subsidies by the operator that may be disguising deficits: is the operator in a good financial position?

5.          the village rules: can you live comfortably within these rules?

6.          ingoing contribution: what is your entry cost for the long-term lease it is roughly equivalent to what you would pay to own the property

7.          recurrent fees: what do you have to pay each fortnight for maintenance and operatin the village

8.          exit fees: 1) departure fee: what share of the initial entry fee or resale price does the operator take? it is usualluy about 5% per annum to a maximum of 25% and 2) share of capital gain: how much does the operator take? and 3) any recurrent fees due after you have moved out but the property has not been sold (there is a 42 day cap)

9. legal action: is the operator constantly being taken to NCAT or to court?

10. word of mouth: do people enjoy living there?

11. the average resident comparison figure: you can use this figure to more easily compare the costs of different village contracts.

 These are all relevant and could be decisive in your decision.

YOU CAN CHANGE YOUR MIND

You can look carefully at all these considerations, sign the contract and then decide not to go ahead OR even after you have moved iin.

·       Cooling-off period: once the residence contract has been signed and provided to the operator, you can withdraw up to 7 business days without penalty, and a full refund of any deposit will be paid.

·       Settling-in period: this is 90 days within moving in once you have paid the ingoing contribution . A full refund applies save for market rent for the period of occupation and the cost of rectifying any damage to the property. 

 RETIREMENT VILLAGES ARE HIGHLY REGULATED IN NSW : HOW DOES THIS HELP RESIDENTS?

 The NSW Government is active in protecting the rights of retirement village residents. There have been signifiant changes to retirement law and regulations in recent years, all intended to rectify or manage systemic problems that residents might face.

In NSW: the Retirement Villages Act (NSW) 1999, and the Retirement Villages Regulation (NSW) 2017 largely regulate how retirement villages are run.

This legislation is consistently amended as these systemic problems are recognised.

 The inclusion of the recent Aged Care Facility Payments in which a former resident may request the operator to make one or more accommodation payments on their behalf is a case in point.

WHAT HAPPENS IF A RESIDENT OF A RETIREMENT VILLAGE HAS PROBLEMS WITH THE OPERATOR?

NSW residents can be comforted by the fact that they can have recourse to the Consumer and Commercial Division of NCAT (the Tribunal) when problems with the Operator, or even other residents arise. NCAT is empowered to resolve disputes under the Retirement Villages Act 1999.

Residents can make an application and an application form is also available.

Flanagan Legal Newcastle can assist residents with such applications (it is helpful to your cause if you ensure your application fits within the NCAT and legislative guidelines).

NCAT hears disputes between a retirement village owner or operator and one or more residents. 

The types of orders NCAT can make includes disputes about:

•  village contracts

• village rules

• capital maintenance and replacement

• recurrent charges

• annual budgets and accounts

• payment of money and compensation

• termination and vacant possession

• security and safety

• sale or letting of premises.

Be aware, however, that clauses in the contract you sign are predomiant unless there are clauses in the contract which are inconsistent with the over-riding legislation. This is why you need advice about the contract you are signing.

RETIREMENT VILLAGE RESIDENTS DON’T OWN THE LAND ON WHICH THEIR PROPERTY IS STANDING, IS THIS A WORRY?

Most NSW retirement village residents sign what is known as a leasehold arrangement. This means that the village operator usually owns the units and each resident signs a long-term lease (commonly for 90 years or more). These leases (if over 50 years) will be registered on the title deed held by Land Registry Services.

 It is good to be registered: this means that your interest is registered on the title deed held by Land Registry Services. This will show up in property searches ensuring that any potential new owner is aware of  your interest. If registered you have the highest priority of ownership above others and you can enforce your property interest against other claims. The upshot is that you have what is called “security of tenure” and your residence right can only be terminated on a very narrow number of grounds and usually by a court.

ON WHAT GROUNDS MIGHT AN OPERATOR ATTEMPT TO TERMINATE YOUR CONTRACT?

•       if you seriously and constantly breach village rules eg interfere with the peace and privacy of your neighbours

•       if there is an upgrade or change of use of the village (but there are protections for residents in these situations)

•       if your mental or physical capacity deteriorates. If operators have concerns about your health may decide to take steps to terminate the village contract.  If the resident refuses to leave they make an application to terminate on medical grounds. The Tribunal will only make an order if it is satisfied that the premises are unsuitable for the resident due to their physical or mental incapacity. In more serious instances, Operators may need to take steps to help that resident transition to more suitable accommodation outside the village.

In summary Retirement Villages:

•     can be comparatively inexpensive to move into and live in,

•     can provide good security of tenure (you cannot be easily removed)

•     when you sell you will probably sell it for at least what you paid initially but the amount is reduced by significant exit fees and you may not get the full amount of capital,

•     In general, you may pay less when you move in, but you are likely to pay more later, by moving into a retirement village.

This article by the retirement village guru Richard McCullagh: “Retirement Villages: a reality check” is well worth reading.