“We are downsizing, should we buy a unit or rather a Retirement Village Unit?” Many people choose to “downsize” once their children have grown up and moved out of the family home. They sell the family home and move to a smaller, more easily maintained property. Which is the better choice?
These are some of the advantages and disadvantages of the two options of either Units / Apartments or Retirement Village Units:
Units / Apartments
- There are many developments to choose from in most locations;
- Fewer rules and less restrictions than Retirement Village units.
- You may still access home care assistance from the Federal Government as you age. Providing home care as an alternative to entering into higher care facilities is currently a priority for the government;
- You may come and go as you please whereas, Retirement Villages often restrict the time you can be away from your property;
- No weekly or monthly service charges; and
- You will retain any capital gain on the sale of the property if you own it in your own name and use it as your principal place of residence.
- Stamp duty is payable on purchase;
- There is no age restriction on residents within the complex;
- You are required to pay body corporate levies, rates and utilities bills; and
- There can be a sense of isolation or a lack of community involvement with other residents.
- Retirement Village contracts are exempt from stamp duty;
- Controlled demographics reduce the risk of incompatible neighbours;
- Onsite emergency call buttons, 24 hour medical assistance and security services may be provided. These services usually incur a cost that is included in the general services charge;
- The replacement or repair of capital items is often included in the regular charges; and
- Additional services such as meals and laundry are often supplied at a cost.
- Retirement Village operators will take exit payments of up to 35% of your original payment plus legal, management and refurbishment fees;
- You will not retain the benefit of any capital gain on the value of the property under most Retirement Village contracts;
- Repayment of your entry payment (less the deductions noted above) are often delayed by up to eighteen months. Management will control the right to sell the property for a specified period. This can cause delays in your ability to make payments of entry bonds for higher care facilities should you need to move to such a facility;
- Retirement Villages are only suitable for people who are able to live independently. However, your health care needs may change and you may require higher care. You have no guarantee that an onsite higher care facility space will be available for you at the appropriate time;
- You are usually required to inform management of any absences and there is usually a limit on the time that you may leave the property vacant;
- Operating a business from the property is normally prohibited; and
- The pool of potential purchasers is limited to only people who meet the eligibility criteria of the Retirement Village.
There are advantages and disadvantages to both options when downsizing to a unit or Retirement Village. Furthermore, you should also consider factors such as your financial situation and your testamentary arrangements.
DBL Solicitors has experience in both types of arrangements. Please contact us to discuss which option is suitable to your circumstances.