Purchasing a home in a loan-lease retirement community in New South Wales (NSW), Australia is a little different from outright purchasing a new home. Moving into a loan-lease retirement community involves purchasing the right to reside in a property for a specified time, often up to 99 years, rather than buying the home outright. There are several benefits for retirees who choose to reside in a loan-lease community, however, we advise you to speak with an expert who can assess your circumstances.
There are several steps in the process of moving into a village like this, and various documents need to be provided to ensure that all relevant issues are properly understood. Our sales team will happily assist you throughout the process should you consider moving into our retirement community here at Mount Gilead Estate. To make the experience of moving into a loan-lease community easier, however, we’ve also provided a simplified overview of the process and the key documents involved.
Begin by researching different retirement villages that offer loan lease options. Consider factors such as location, facilities, services provided, costs, and contractual agreements.
Visiting different retirement villages provides invaluable firsthand experience. Take the opportunity to tour the facilities, interact with staff and current residents, and attend community events if possible. This visit allows you to gauge the atmosphere, sense the community vibe, and determine if the environment feels comfortable and welcoming to you.
During your visit:
By thoroughly researching and visiting different retirement villages, you gain a comprehensive understanding of what each community offers. This information is vital in making an informed decision that suits your lifestyle, preferences, and long-term needs when purchasing in a loan lease in a retirement village.
Before a contract is signed, village operators must provide two documents for prospective residents’ review. They are the General Enquiry Document and a Disclosure Statement. Both are prescribed in the Retirement Villages Act and related regulations. Any village rules must also be shared and there is a set of mandatory information that the operator must produce on request.
The retirement village operators must provide a general enquiry document within 14 days of an enquiry into living in a retirement village being made. This document serves as an initial gateway, providing fundamental details for prospective residents to evaluate whether the retirement village meets their needs and preferences. It provides general information about the village including the types of homes available, facilities on site, services, and costs. Prospective residents can use this information to assess the suitability of a particular retirement village before moving forward with visits, consultations, or considering contractual agreements.
Upon expressing interest in a loan lease community, it is your right as a prospective resident to request a disclosure statement from the operator. This document is legally mandated and serves as a comprehensive source of information about the community’s operations, services, fees, and living conditions. It includes essential details about the community’s structure, rules, and financial aspects, allowing you to make an informed decision about potential residency.
It typically includes detailed information about:
Upon receiving the disclosure statement, take sufficient time to meticulously review its contents. Scrutinise the details provided and compare them with disclosure statements from other loan lease communities you might be considering. By doing so, you can gain a broader perspective, allowing for a more informed and comparative analysis of the communities.
The Average Resident Comparison Figure (ARCF) is a financial indicator utilised in the retirement village industry to help prospective residents understand and compare the potential costs associated with living in different retirement villages. It’s designed to offer a standardized figure that consolidates various fees and charges expected to be incurred while residing in a particular retirement village.
Operators are required to include the ARCF in the disclosure statement provided to prospective residents, aiding in transparent and informed decision-making.
Once the total costs are calculated, divide this sum by the expected number of years of residency. This provides an average annual cost, aiding in comparison with other retirement villages or living arrangements.
It is important to note that the ARCF is an indicative figure and may not cover every expense or variation in costs for each resident. Residents should refer to their specific contract terms and conditions for accurate cost details as the ARCF provides a generalised estimate.
When evaluating the total annual outlay, however, it is important to include home maintenance, medical, recreation, and entertainment costs which can be much lower for those living in a retirement community, depending on the amenities and services available. Unfortunately, many comparison models don’t include these savings.
Calculation of the ARCF:
The ARCF is calculated by summing up the typical fees that a resident is likely to incur while living in a specific retirement village. These costs generally include entry fees, ongoing service fees, and any additional costs such as administration fees that aren’t included in the ongoing fees.
It is recommended that prospective residents of a retirement village consult with financial and legal advisors before signing any contracts.
Consulting with financial advisors or legal experts specialising in retirement village contracts can provide invaluable insights. These professionals can help you determine whether the financial commitments align with your retirement goals and financial capabilities. You can also read more about investing in a retirement village home here.
Select the Right Village for you. Based on your research visits, and consultations, choose the retirement village that best suits your needs and preferences.
Once you have selected the village you want to move into, a contract will be prepared for both the village operator and resident to sign. Some villages may ask you to pay some additional fees. These might include any of the following;
Contract preparation costs
Normally the operator will pay to prepare the contract, such as legal and administrative expenses, however, some may ask the resident to pay towards these expenses up to a maximum amount of $50.
Waiting list fees
Where there is a waiting list to move into the village, a fully refundable waiting list fee may be charged to have your name added to the list. The maximum fee that can be charged is $200 and a copy of their written waiting list policy and a receipt must be provided for all waiting list fees paid. Should you decide not to move into the village, the operator must provide a refund within 14 days of being notified in writing of the decision.
Holding deposits
A fully refundable holding deposit is a common fee that many village operators charge to hold a vacant unit for a prospective buyer before the contract is signed. Should the prospective buyer decide not to move into the village, the deposit must be repaid in full within 14 days of being notified in writing of the decision.
Operators must provide a standard contract at least 14 days before the move-in date. A standard retirement village contract typically includes various essential components and inclusions to ensure clarity, fairness, and protection for both the retirement village operator and the resident. While specific details may vary, the contract will normally specify the following;
The contract should also include the following attachments;
Thoroughly examining and understanding every aspect of the contract provided will help ensure you make the right decisions about your choice to move into a retirement village. This ensures that you enter the loan lease arrangement with full awareness of your rights, responsibilities, and potential future scenarios, providing you with peace of mind and security throughout your residency.
The retirement village operator might require a financial assessment to evaluate whether potential residents have the financial capability to meet the ongoing service fees and other associated costs without facing undue financial strain. It also ensures that residents can maintain payments for the duration of their stay in the retirement village.
Prospective residents may be required to provide comprehensive financial information as part of the assessment. This could include details about income sources, assets, savings, investments, pensions, and any outstanding debts or liabilities. Operators might request bank statements, tax returns, proof of income, and asset valuations to verify financial standing.
Operators handling financial assessments are typically bound by strict confidentiality regulations. Your financial information is kept confidential and used solely to evaluate eligibility for residency. Ensure that you understand the privacy policies and consent to the use of your financial information for assessment purposes.
Once satisfied with the terms and after receiving legal and financial clearance, pay the entry fees and sign the contract.
Understand the payment method and any installment options if available. Keep records of all payments made and obtain receipts for documentation purposes.
Take your time to read through the contract once more before appending your signature. Ensure that all parties involved have signed where necessary and that the agreement is complete and accurate. You should also maintain copies of all signed documents, receipts of payments made, and correspondence related to the purchase. These documents serve as essential records and can be referred to in the future if any issues or queries arise regarding the terms of the agreement.
Following the signing of the contract, residents are granted a specific duration, typically seven days, known as the cooling-off period. During this time frame, both the resident and the retirement village operator have the option to withdraw from the contract without facing significant repercussions.
After completing the necessary paperwork and payment processes, the settlement date will be determined. This is when you officially take possession of your property within the retirement village. Coordinate your move-in date and make the necessary arrangements.
Once you move in, take time to familiarise yourself with the community, engage with fellow residents, and participate in village activities. This helps you to acclimate to your new environment and build connections within the community.
Apart from the cooling-off period, residents are further provided with a settling-in period, which for villages in NSW is 90 days from the commencement of their residency within the retirement village. This period is designed to facilitate a smoother transition for residents into their new living environment, offering certain benefits if they decide to leave early.
A NSW retirement village contract entitles the resident to a 90 day settling-in period. Within this time, a resident is entitled to terminate the village contract.
Reduced Financial Obligations: During the settling-in period, residents who need to leave the retirement village for any reason are subject to limited financial obligations. These obligations may include:
No Departure Fee: Notably, residents are exempt from paying any departure fees during the settling-in period. This provision allows residents the flexibility to adjust to their new living arrangement without the concern of incurring substantial financial penalties if they decide to leave within this timeframe.
Purchasing a property in a loan lease in a retirement village can offer a rewarding and comfortable lifestyle for seniors. However, it’s crucial to approach the process with thorough research, legal guidance, and a clear understanding of the financial commitments involved. By following these steps and being well-informed, you can make a well-considered decision that aligns with your retirement goals and lifestyle preferences.
Visit Mount Gilead Estate to see what your retirement could look like. Tour the village to see our resort-style retirement facilities.
Complete the form with your details and preferred tour times or any questions you have and a member of our sales team will be in touch.
