As you transition into your golden years, the concept of retirement often comes hand in hand with a change in living arrangements. For many, this means possibly purchasing a retirement home. Making this decision is a significant one, requiring careful consideration of various factors other than costs, to ensure it aligns with your lifestyle and preferences.
‘Owning’ the home
Most, if not all, retirement homes do not allow you to legally own the home you pay for. This means you will not hold the title deeds to the property.
Loan & Lease Agreement
The most common structure is to enter into a loan and lease agreement with the retirement village. This means you will loan an agreed amount to the village and they rent the premises to you ‘for life’, such as 99 years. The amount you loan is similar to a purchase price, so it can either be reflective of market prices, or a fixed cost set by the village.
Land lease community
Most retirement villages already have a physical premise that you can readily move into. But if you are looking to build your own dream retirement home, you can look to land lease communities. These communities own the land but sell the home that will sit on the land. You can select from a set of designs available from the community developer and own the home without being responsible for land-related costs, such as council rates. The land is then rented to you for the time you live in the home.
Goods included in retirement villages
Some retirement villages offer fully furnished homes ready for you to use. This can occur because of two reasons:
- The furniture and fit-out belongs to the village and are included as part of the rent; or
- The village is rebuilding the home, and you can negotiate what furniture you want included as part of the entry purchase price.
Check the agreement carefully to ensure you have wiggle room to furnish the home before offering a purchase price or rental amount. An agreement must address your ability to alter or add to the home.
Costs
Many agreements will have additional ongoing maintenance costs payable to the village. These costs may be to cover for cleaning, gardening, food or general maintenance, depending on the type of agreement.
There may also be ‘entry’ or ‘exit’ fees payable to the village. The total costs of these fees are dependent on the type of village, agreement or length of stay.
Before you sign an agreement for such an important phase of your life, have our conveyancing lawyers in Melbourne review the documents to ensure your interests are best protected.
