retirement village contracts, schemes and fee structures are complex and confusing. We simplify and explains the various schemes.

Retirement Village Information

Retirement living truly is a community lifestyle that enables social interaction, companionship, physical and emotional security. Residing in a retirement community is a convenient way of living with low maintenance gardens and homes that you can lock up and leave to go on adventures or visit loved ones. Retirement living enables residents to manage their finances as the costs are stated from the outset providing an economical, high standard of living.

There is no doubt however that retirement village contracts, schemes and fee structures are complex and confusing.

Shine Retirement’s expertise in the industry aims to simplify and explain the various schemes to enable our clients to make informed and empowered choices about their future home or investment.

Legislation

Within Australia retirement villages and manufactured home parks are governed under State and Territory legislation. In Queensland the legislation governing retirement communities falls under the Retirement Villages Act 1999 and Manufactured Home Park Act 2003. Both Acts are currently under review by the Queensland Office of the Registrar.

In Queensland there are 168 Manufactured Home Parks with some specialising in over 50’s living and over 300 Retirement Villages with many more planned or under development.

Types of Retirement Units

There are two types of retirement units – Independent Living Units (ILU) and Serviced apartments.

Typically an ILU is a villa, townhouse or unit whereby the residents live independently without support from the operators (although most have an emergency built-in call system).

A serviced apartment is generally smaller than an ILU and the residents receive an enhanced level of care such as meals, laundry and cleaning.

Some retirement villages are governed by commercial operators whilst others are owned by not-for-profit organisations. Some villages have residential care centres onsite whilst others have in-home care services to assist residents in their home.

Types of Occupancy Rights

There are many types of occupancy rights and legal title arrangements operating under retirement village schemes such as licence / loan agreements, freehold, leasehold and community title. Within these schemes there are a number of payment methods some of which enable you to benefit from capital gains others that are discounted and ‘pay as you go’ arrangements. Before entering into a retirement village contract it is important to understand the scheme, fees and charges and the various payment methods of your desired village.

It is strongly advised you seek expert advice from Shine Retirement to assist you with your property purchase. For more information on retirement village schemes refer to FAQs below.

Retirement Village FAQs

In Queensland a ‘retirement village’ is defined under the Retirement Villages Act 1999 as:
‘premises where older members of the community or retired persons reside, or are to reside, in independent living units or serviced units, under a retirement village scheme.’

In essence a retirement village is a managed community for seniors to reside in either independent living units (ILUs) or Serviced units.

In Queensland a ‘manufactured home park’ is defined under the Manufactured Home Park Act 2003 as:
‘A manufactured home is a structure, other than a caravan or tent that has the character of a dwelling house, is designed to be able to be moved from one position to another and is not permanently attached to land’.

There are various types of manufactured home parks such as mixed use with caravan sites and holiday cabins. There are also purpose built home parks exclusively for the over 50s. In a manufactured home park a resident owns their home and pays rent to the park owner for the site. The resident may be eligible for Commonwealth rent assistance.

A retirement village scheme refers to when a person enters into a residence contract, pays an ingoing contribution under the residence contract, acquires the unit personally or for someone else and has a right to reside and receive services within that retirement village. There are four main types of purchase / occupy arrangements that offer various types of ownership – freehold, leasehold, licence and company title schemes. Below is an outline of each scheme:

Leasehold Agreements

Under leasehold agreement the resident purchases ‘a right to reside’ within a unit in the stated retirement village, for an extended period of time, such as 99 years. The resident pays an ingoing contribution to occupy the right to reside. Upon exit the resident is required to pay a deferred management fee (DMF) to cover the management costs of running the village. The DMF is determined according to a calculation method which must be detailed in the residence contract. It is generally a percentage of the ingoing or outgoing contribution with the percentage increasing each year up to a maximum amount. Under a leasehold agreement the resident pays a rental charge for the land that the unit is located on. In some cases the resident maybe entitle to Commonwealth Rent Assistance for the land.

Loan / Licence Agreement

A loan / licence agreement is where you pay a ‘loan’ to the village operator for the purchase of your unit (ingoing contribution). In return for your ‘loan’ you will have a licence to occupy the unit ‘a right to reside’. Under a loan/licence agreement the village operator owns the property and receives interest from the loan. Upon exit the resident is required to pay a deferred management fee (DMF) to cover the management costs of running the village. The DMF is determined according to a calculation method which must be detailed in the residence contract. It is generally a percentage of the ingoing or outgoing contribution with the percentage increasing each year up to a maximum amount.

Freehold Title

The title for freehold units are owned by the resident (similar to owning your own home). A body corporate governs the complex within limits of the charter and Qld state legislation. The body corporate charges residents fees to cover the cost of operating the village. A freehold title can be mortgaged, the unit owner is responsible for insuring the unit to its full replacement value and generally there are no exit fees (although some operators still charge exit fees). Stamp duty is applicable to the Qld state government upon purchase.

Company Title (Shareholder)

Company title is a type of scheme whereby a corporation owns the village and the residents purchase shares within the company giving them the right to occupy the units within the village. The shareholders appoint a board of directors to take responsibility for the operations of the village.

There are two main types of payment options for retirement villages. Generally you can pay a lesser amount called ‘non-participating’ meaning you don’t receive capital gains/loss when you leave or more called ‘participating’ to acquire capital gains/loss when you leave.
A person is a retirement village scheme operator if the person, alone or with someone else, controls the scheme’s operation or purports to control the scheme’s operation. Some villages are owned independently, some are larger corporations with shareholders and some are not-for-profit operators.
A resident of a retirement village is a person who has a right to reside in the retirement village and a right to receive one or more services in relation to the retirement village under a residence contract.
A residence contract is one or more written contracts, other than an excluded contract, about residence in a retirement village entered into between a person and the scheme operator.

A public information document is a document giving details about the retirement village scheme. A public information document for each resident is taken to form part of the resident’s contract to which the public information document relates.

Information the PID includes:

  • Residents’ obligations and rights
  • Financial information – costs, charges, fees, funds and exit entitlement
  • Accommodation types – independent living units and serviced apartments
  • Facility information and services
  • Process for dispute resolution
A home owners’ information document is a document given to prospective home owners for a site in a residential park to help make an informed decision about entering into a site agreement.
A site agreement is an agreement between a park owner and the home owner that provides for the rental by the home owner of particular land in a residential park.
The park owner is a person who owns a residential park.

There are three main fees and costs associated with retirement village schemes, these are:

Entry Cost / Ingoing Contribution / Purchase Cost / Sale Price

This is a one-off payment, paid on entry which secures yours, or someone else’s right to live in the village.

Exit Costs or Deferred Management Fee (DMF)?

An exit fee is an amount which the resident is required to pay the operator under the terms of the residence contract. It is the profit the operator receives for managing the village. The DMF is determined according to a calculation method which must be detailed in the residence contract. It is generally a percentage of the ingoing or outgoing contribution with the percentage increasing each year up to a maximum amount.

Ongoing Charges

Retirement village operators charge on-going charges for services / facilities outlined in the Public Information Document (PID) and Residence Contract. There are two main types of ongoing charges:

General Service Fees (GSF)

GSF pay for services that operators supply or make available to all residents. GSF increases usually occur within an annual budget cycle. You can ask for a quarterly financial statement which an operator must provide within 28 days. GSF increase with CPI or in accordance with the Retirement Villages Act 1999.

GSF include:

  • Administration and management
  • Gardening and minor maintenance
  • Recreation or entertainment
  • Other services in contract.

Optional Personal Service Charges

These fees pay for optional personal services such as:

  • Meals
  • Cleaning
  • Laundry
A capital replacement fund is a fund established for replacing the retirement village’s capital items such as buildings and amenities. A capital replacement fund contribution is decided by the scheme operator using a quantity surveyor’s report. The scheme operator is responsible for contributions to the capital replacement fund.
A maintenance reserve fund is a sinking fund established for maintaining and repairing (not replacing) the retirement village’s capital items. The maintenance reserve fund forms part of the monthly general service charge. It is calculated taking into consideration the quantity surveyor’s report and funds purpose. The residents are responsible for contributions made to the maintenance reserve fund.

The village operator must take out general insurance for the village and residents are required to contribute towards the cost of this insurance. The cover must be reinstatement cover for the accommodation units, recreational and communal facilities (except for freehold schemes where the body corporate is responsible).

Residents should take out their own contents insurance and if the unit is free-standing on a lot owned by the resident the resident should take out building insurance too. Insurance for the accommodation unit is the responsibility of the owner (free-standing unit) or body corporate (non free-standing).

A resident has the right to terminate a residence contract without penalty within 14 days of the cooling off period. If the residence contract is terminated after the 14 days cooling off period the resident is entitled to an exit entitlement. A resident has a right to terminate by giving one months written notice to the village operator.

The process for sale depends on whether the village operator has or does not have controlling right to sell the right to reside. If the village operator has a controlling right to resell the right to reside the resident and village operator must attempt to agree on the resale price and the operator must inform the resident of the all offers on the unit. If the village operator and resident cannot agree on the resale price the operator must obtain a valuation from a certified valuer. If the village operator accepts an offer that is less than the agree value, the exit entitlement is based on the agreed resale value. The resident is entitled to a written estimate of the exit fee and entitlement within fourteen days of a request.

The village operator has the right to terminate a residence agreement by giving two months notice if the resident has committed a material breach, reasonably believes the resident has abandoned the unit or the if the type of accommodation is deemed no longer suitable for the resident following an assessment of the residents needs under the Aged Care Act 1997. The village operator has the right to terminate a residence agreement by giving fourteen days notice if the resident is or likely to injure a person within the village, seriously damage the unit or another persons property.
Yes, there is a 14 cooling-off period. During this time you can terminate your residence contract by giving written notice to the village operator.
Queensland retirement villages and manufactured home parks are governed by the Queensland Department of Housing and Public Works and Registered by the Queensland Office of the Registrar.

Yes, in the event of a dispute you can contact:

Queensland Civil and Administrative Tribunal

An independent alternative dispute resolution body for retirement village disputes.

Level 9, 259 Queen Street, Brisbane Qld 4000
GPO Box 1639, Brisbane Qld 4001
Freecall 1300 753 228 (Monday to Friday, 8.30am to 4.30pm)
P: (07) 3221 9156
W: www.qcat.qld.gov.au
E: enquiries@qcat.qld.gov.au

Queensland Law Society (Elder Law Section)

GPO Box 1785, Brisbane Qld 4001
P: (07) 3842 5842 (referral line)
W: www.qls.com.au

Yes, there are a few associations.

The Association of Residents of Queensland Retirement Villages (ARQRV)

An association for the protection of the interests of all residents in Queensland retirement villages.

PO Box 1361, Buddina Qld 4575
P: (07) 5493 7112
E: pres.arqrv@gmail.com

Leading Age Services Australia Queensland

Queensland Association promoting good corporate governance and retirement village residents well-being.

PO Box 995, Indooroopilly Qld 4074
P: (07) 3725 5555
F: 3715 8166
E: info@qld.lasa.asn.au

The Park and Village Information Link (PAVIL)

PAVIL is a specialist service providing free information and legal assistance for residents and prospective residents of retirement villages and manufactured home parks in Queensland.

Caxton Legal Centre Inc.
1 Manning Street, South Brisbane, QLD 4101
P: (07) 3214 6333
E: caxton@caxton.org.au
W: www.caxton.org.au

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