The Star: July 25, 2019

StarMedia.Digital

RETIREMENT

VILLAGES

8

LAW

LIVING

LIFE

Security, freedom from home maintenance

worries, support, companionship and on-site

healthcare are just some of the reasons why

you might be contemplating the move to a

Retirement Village. But the implications of

buying in a Retirement Village are varied and

often seem quite complex.

Retirement Villages typically utilise devices

called Occupation Right Agreements (ORA).

These do not transfer ownership, as such,

but rather, they confer a licence to occupy a

certain unit at the Village until a given event.

Under an ORA, you make an initial payment

for entry into a Retirement Village, often

referred to as the purchase price of the ORA.

From this initial capital payment the Village

will apply a formula for calculating a ‘deferred

management fee’ or ‘village contribution’ that

is deducted from the entry payment when

you end the ORA. This exit fee is usually

between 20% to 30% of your entry payment

and accrues between 2 to 5 years from your

entry date. Be aware that often the balance of

the entry payment will not be repayable on

termination but rather, when the owner

finds a new resident for the unit.

There are three main additional costs

you should consider and compare when

you are looking at Villages. In addition

to the exit fee, there will be a weekly fee

payable to the village owner to cover

the running costs of the village. Some

Villages will fix this fee from the date of

your ORA, others will increase the fee tied to

the consumer price index or the increase in

the National Super rate, and others to account

for the increased cost of services each year.

There is usually another weekly service fee

based on the extra services you require or

opt for. There may also be other costs and

you should carefully view all the Village

documentation before you commit to avoid

any surprises once you’ve settled in.

While it is by far the most common approach,

not all Retirement Villages use the ORA

model. Some use different types of ownership

structures such as unit titles and cross lease

titles. It is important to be informed about

the ownership model of any Village you are

considering, and to get the appropriate legal

and financial advice.

The decision to move into a Retirement

Village is not one you should rush. Think

about the things that are “must haves” for

you and pick a Village that enables you to

achieve these goals. Look at different Villages

and speak to the residents if possible, to

ensure that the Village ticks all your boxes

and involve your family and friends in your

decision making process. At Harmans we

have experience dealing with purchasing in a

Retirement Village. Give Phillipa Shaw a call

on 03 352 2293 to arrange an appointment to

discuss your situation.

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