Retirement villages – are they right for you?
Retirement villages are big news and heavily promoted. But do they measure up?
Key points
- Industry claims growth in development points to market demand.
- National Seniors' research explores complexities, multi-jurisdictional laws, and lack of transparency.
- We are calling for nationally consistent laws governing retirement villages.
The retirement village sector promotes itself as the purveyor of age-friendly communities and a solution to an ageing population, sky-rocketing healthcare demand and even the nation’s housing crisis.
The benefits of downsizing into retirement villages for older Australians (and governments) include fewer visits to the GP, shorter hospital stays, and safer, healthier, senior communities, as well as the injection of more housing supply into the market.
But this depends on whether seniors want or can downsize their homes. The industry says the annual retirement village development growth reflects market demand and seniors making the move.
Ninety-two villages have been built in the past three years, an average of 30 a year, indicating $1 billion a year is going into retirement village construction.
The industry says to meet expected demand, 60 new projects are needed annually.
But are seniors convinced?
What do people want when they downsize? Despite all the promotion of retirement villages, there continues to be a negative view of this type of housing.
A retirement village is a special type of housing outside the housing market that is regulated by state and territory legislation.
National Seniors' research into retirement villages reveals, despite being heavily regulated, seniors continue to raise common issues and complaints. Your concerns have shaped our submissions to government about retirement villages.
Based on these concerns, our view is that retirement village legislation does not adequately protect older Australians and even gives them a false sense of protection.
As a rule, we do not promote villages as a suitable downsizing option. They may have the potential to provide a comfortable lifestyle option, which is more suitable as people age, but this promise has been lacking because the legislation has enabled practices that are detrimental to the financial well-being of seniors.
This is disappointing as retirement housing could play a stronger role in addressing some factors fuelling the housing crisis.
We believe the existing system fails seniors through a lack of transparency regarding contracts, especially management fees, deferred management fees, entry/exit fees and refurbishment fees.
The current retirement village business model relies on securing future sales. Buyers are hit with late fees - a cost that is not easy to understand without expensive legal and financial advice.
There is also a problem with delays in the resale of retirement village properties, resulting in ongoing costs to former residents or residents’ families.
This is particularly challenging when residents are required to enter a residential aged care facility. Given the current housing crisis, and the lack of affordable housing and suitable housing to downsize into, it appears inexplicable that some retirement villages would struggle to resell units within a reasonable timeframe.
The average period to sell a unit in a retirement village in Victoria is about 7.3 months. However, last year, houses in Melbourne sold within two months on average.
We are skeptical about the industry's claim of increasing demand. We think buyers are increasingly wary, and rightly so, of the retirement village model.
Seniors are worried about the potential negative financial aspects of buying into a retirement village.
Those who do become residents may not have fully understood the financial implications.
Time limits on sales
State governments are increasingly (albeit slowly) introducing time limits for the resale of retirement village units, which National Seniors strongly supports:
- In Queensland, retirement village legislation was amended to require the payment of existing entitlements within 18 months (although it has recently been suggested that it is reduced to 12 months).
- Retirement villages in New South Wales must provide a former resident with an exit entitlement within six months in metropolitan areas or 12 months in other areas.
- In Western Australia, changes to retirement villages legislation will occur, requiring exit entitlements to be paid within 12 months.
Laws governing retirement villages are too complex and inefficient.
We want the Federal Government to enact nationally consistent and strengthened retirement village legislation rather than the current system of complex and inefficient state, territory, and local government laws.
The retirement village sector supports this because it would reduce compliance costs and allow operators to deliver projects more easily across state and territory borders.
Greater transparency between operators and residents is urgently needed so older Australians can feel confident they are not being taken advantage of.
The retirement village market should be reformed to resemble the residential property market, where owners have greater control over the private areas of their units, including greater control over reselling.
- Pension exemption for downsizing – we are lobbying for home care recipients aged 80+ to downsize without the sale affecting their pension payment, to help them live in more suitable housing and keep them out of hospital and residential care.
- Seniors stamp duty concession – stamp duty concessions for Pensioner Concession Card holders will make downsizing more financially attractive.
Join our Better Housing Campaign and help us fight for better age-friendly housing.
For further reading: The Weekly Source, NSA Review Retirement Villages Act, Fairer Concessions
