Retirement village living looks great in the brochures, and buying into a retirement village can be a wonderful lifestyle choice, but it’s important to understand exactly what you’re paying for. It’s very different to buying a family home or investment property.
Before you move in, there are a number of important documents that will need to be provided to you, including a retirement village entry condition report. In this article, we highlight important things to note about this report. However, this is general information and obtaining legal advice is strongly recommended before entering into any contract.
How is Buying into a Retirement Village Different to Buying Other Property?
Buying into a retirement village is very different to buying real estate. You may be familiar with the contracts involved in buying and selling property, but retirement village contracts are typically more complex and can be structured differently from village to village.
Here are some key differences to note:
- Property Title: In many cases, buying into a retirement village does not mean the resident owns the property title. Instead, you’re purchasing the right to live in the unit and access the shared facilities and amenities of the village.
- Contracts: Buying into a retirement village could involve as many as four contracts.
- Ongoing Fees: Service fees may be charged (typically monthly) to cover maintenance, cleaning, gardening and general upkeep of the village grounds and shared facilities.
- Exit Fees: Retirement village contracts typically require the resident to pay exit fees and associated costs when they leave.
What is a Retirement Village Entry Condition Report?
If you’ve ever rented or been a landlord, you’ll know that an entry condition report is a record of the property’s condition BEFORE the tenant moves in.
A retirement village entry condition report works in the same way. The document details the condition of the unit at the time you move in. In the event that there is a dispute about the condition of the unit when you move out, this document can be referred to for evidence. For this reason, it’s important that you check this report to ensure you agree with the operator’s assessment of the unit’s condition.
According to Andrew McIntosh, building inspector, “Retirement Village Units follow a different set of rules for purchase than your standard investment property or home. This can leave the retiree vulnerable to unexpected costs if they don’t have their contract checked carefully, as you don’t have the protection of a formal building and pest inspection.”
Things To Consider
The retirement village unit you choose will be your home for the foreseeable future, so it makes sense to consider the whole picture before you commit.
Always Inspect the Unit First
Always inspect the unit in person. It’s important to walk through the space and get a feel for it. Is this somewhere you can picture yourself making a happy home?
During your inspection, pay attention to the overall condition of the unit, including existing damage, worn carpets, etc. Keep an eye out for signs of water leaks or mould – stains on walls and ceilings can be a giveaway, as can a damp smell. If you see anything that needs replacing or repairing, raise these concerns with the village operator as soon as possible.
Stroll the grounds and pop into the recreational facilities. Ideally, they’ll align with the lifestyle you’re dreaming of. Stop to chat with village residents for their thoughts on living there.
Be Present for the Entry Condition Report Inspection
It is your right to be present when the retirement village operator inspects the unit to complete the entry condition report. If you can’t attend, you may send someone to act on your behalf.
Room by room, note any existing damage, scuffs on the walls, marks or stains on floors, broken blinds, and other wear and tear, and ensure it’s included in the report. Take your time and don’t be afraid to speak up if you don’t agree with the condition assessment. The report should be a reflection of the unit’s condition as agreed to by both the resident and the operator.
Be Aware of Your Rights and Responsibilities
This unit could be home for decades to come, so it’s important to understand what you can and can’t do while you live there.
Things to ask about include:
- Pet Ownership: Can you keep a pet, and if so, are there any rules involved?
- Refurbishments: What alterations are you permitted to make? Confirm the rules regarding painting, new flooring, garden spaces, etc. Can you upgrade heating, cooling, hot water systems, etc?
- Repairs: If the property needs repairs, who is responsible for organising them, and who pays? What about property insurance?
- Guests: Can you have family to stay, and if so, are there any limitations?
Get Legal and Financial Advice
Buying into a retirement village is not always the best choice financially, and retirees can get caught out when they misunderstand the terms of their contracts.
It is strongly recommended to:
- Compare retirement villages and carefully consider your budget before making a choice.
- Consult your financial advisor for guidance.
- Engage a solicitor who specialises in retirement village law to review all contracts and clearly explain the terms to you.
