Retirement Villages or Land Lease Communities
Lifestyle communities and some of the issues that can crop up from them were recently featured on ABC’s 7:30 report segment. A potential resident should be aware of whether the community is a Retirement Village which operates under the Retirement Villages Act 1986 (Victorian Government legislation) or is a Land Lease Community which operates under the Residential Tenancies Act 1997. There are significant differences between the two.
Retirement Villages
The majority of operators in the retirement space (e.g. Ryman, Country Club Living) are covered by the Retirement Villages Act. After sale of the unit, profit is derived from the exit fee or Deferred Management Fee of up to 35% of the sale price. However, the monthly fee charge is limited by law to cost recovery of providing services to the residents. This and the ownership structure are the 2 main differences between Land Lease and Retirement Village models. Note that there may be other fees such as refurbishment and sales fees.
Land Lease Communities
Lifestyle Communities Ltd operates under the Residential Tenancies Act which covers Caravan Parks and owns the land while the resident owns the home. After sale of the unit, profit is derived from the monthly fee and (with this operator) the exit fee of up to 20% of the sale price. Note that some Land Lease community operators do not charge an exit fee. Some exit fees have created issues and consequences for exiting Lifestyle Community residents
interviewed in the 7.30 report.
Moving to a Land Lease Community or Retirement Village should be primarily a lifestyle, not financial, decision. There is also a common misconception that Retirement Villages are tied up with Aged Care. Aged Care facilities are separate entities.
If you would like to talk through lifestyle community options further, Rob Landale is an Accountant and Retirement Consultant who is happy to talk through options suitable for your situation. He can be contacted on: 0429 824 324 or rob@surftax.com.au
