Over-50’s communities have exploded across the country over the last ten years and are a popular downsizing decision for retirees. But how are they different to retirement villages?
The over-50’s (or lifestyle communities) are very different to retirement villages. Here are some of the key differences:
1. Legislation
Retirement villages operate under State retirement villages legislation, an Act that was established specifically for retirement villages. The retirement villages act is primarily concerned with consumer protection and contains many provisions that protect the rights of residents.
Over-50’s communities operate under State residential tenancies legislation and local council regulations regarding caravan parks. Older communities are literally converted caravan parks!
2. Tenure & ownership
In a retirement village, a resident buys a “right to occupy” their unit in the form of a long-term or “length-of-life” lease. Freehold title remains with the village operator.
In an over-50’s community a resident buys the home (the building) and leases the block of land on which it sits – just like a caravan park! Homes are in theory meant to be relocatable (like a caravan!) but no-one actually moves them.
3. Fees and charges
Residents in retirement villages pay a fortnightly fee that covers all costs apart from insurance for personal items, telephone, wifi, power and water. Plus repairs and maintenance costs for the outside of the unit are funded by the village budget.
In lifestyle communities, residents pay a site fee instead of council rates. All other costs are payable by the resident, including building insurance and all repairs and maintenance to the house.
4. When you leave
When you leave a retirement village, you receive your money back less an exit fee, which is calculated as a percentage of what you paid to buy your lease. Some residence contracts share any capital gains with the resident, while some contracts don’t. The exiting resident is responsible for any damage to the unit, while the village operator normally organises and pays for any refurbishment work to modernise the unit for resale (this varies according to the retirement village contract).
Residents leaving an over-50’s community are responsible for any work to upgrade or fix the home and require the site operator to execute a new land lease for the site with the new owner. There is no exit fee payable (except in Victoria, where some operators charge exit fees) and any capital gains or losses on the resale are wholly the responsibility of the exiting resident.
Which is the right community for me?
Industry trends point to over-50’s and lifestyle communities being more popular with younger retirees, with an average entry age of around the mid-60’s. Retirement villages are more popular with older retirees, with an average entry age of mid-70’s.
However, different communities have different cultures or vibes, and it is best to make a decision after visiting as many sites as you can, to determine which one is the right fit for you.
