Costs and financial implications

  • 1. Entry payments

    • The deposit usually held by the statutory supervisor, or in a solicitor's trust account if there is no statutory supervisor

    • The balance of the capital sum (purchase price) paid by the resident for the right to occupy, usually paid on expiry of the statutory cooling-off period

  • 2. Service and facility fees — known as weekly or periodic fees

    There are two categories of regular, periodic fees:

    • Operating expenses of the village shared by all residents, known as village outgoings (or 'weekly fees'). Some times these costs are divided equally, or with a weighting adjustment based on the number of occupants of a unit or type of unit. Sometimes these fees are fixed throughout your occupancy

    • Regular fees for specific services, such as personal or care services, provided to specific residents and negotiated as part of their unique occupation right agreement terms. These costs are additional to outgoing charges

  • 3. Exiting costs

    Usually when an occupation right agreement is terminated, a departing resident or its estate is repaid the original capital sum less deductions such as: 

    • The deferred management fee, known by other names in some villages such as 'village contribution', 'fixed deduction', 'facilities fee', 'amenities contribution'

    • Any administration, sales or legal fee agreed to be deducted

    • Any specific service fees charged to a resident but not paid at the date of termination

    Our financial checklist suggests questions to ask an operator when inspecting a retirement village. Click here to find the financial checklist here.

  • 4. Changes in circumstances — care costs

    There may be additional costs  if you or your spouse need extra home help or are needs-assessed for residential care while you are living in a retirement village. Premium care rooms will incur additional daily premium charges.

     

What are some financial implications of entering an occupation right agreement?


  • Most operators do not offer a share of any capital gain in the value of the unit a resident has occupied

  • The deferred management fees, which are deducted when you decide to terminate your occupancy, start to accrue from the moment you become a resident

  • Most residents exit with at least 20 - 30% less capital than when they entered the village. Their ability to purchase something else in the market may be severely restricted if they have to rely on the balance of capital they receive back from the operator. The values of property may have increased during the time they have been residents in a village

  • Departing residents usually have to wait for repayment of their capital until after the new resident buying the departing unit has finished its cooling off period. This may require you or your estate to have bridging arrangements for any transfers needing to be made quickly

  • Weekly fees may continue to be charged by the operator until the unit is re-licensed or re-sold to a new resident. The Code of Practice requires operators to reduce those outgoings charges by 50% if the unit remains unsold within six months of the resident vacating it

  • Most occupation right agreements are based on a resident-funded model. The operator must set out what fees and charges are paid for by the resident in the disclosure statement and occupation right agreement.If the occupation right agreement is not offering a fixed weekly fee arrangement, consider how changes to weekly fees could impact on your ability to pay those fees or have other choices, or how you might meet unforeseen expenses such as new hearing aids.The costs of care will be additional

Tips for intending residents and their families

Pathways to Care: Retirement Villages

Pathways to Care: Retirement Villages

Financial Implications: Moving to a Retirement Village