The property team at Affinity Lawyers have noticed an increasing number of clients enquiring about, or entering into contracts for the ‘purchase’ of property in retirement villages.
While the purchase of a unit in a retirement village may seem like a simple, straight-forward process, in reality it is quite complex. These types of transactions are covered by multiple pieces of intricate legislation, and there are many pitfalls which purchasers may be unaware of until after settlement, when it is too late.
More often than not, contracts relating to retirement villages are for the sale of the right to reside in the premises (by way of a lease agreement) rather than the actual purchase of real property. There are also significant fees and charges associated with retirement village properties which can catch a buyer unaware, including stamp duty, incoming contributions (which are generally non-refundable/or depreciate each year according to a schedule in the contract), and general services charges.
Not only are buyers charged fees to enter into the residential village and during the period that they are residing in the village, many retirement villages also charge exit/deferred management fees (generally calculated based on the length of time the resident was residing in the property) and take a portion of any capital gains made on the property. These fees can equate to a significant percentage of the original purchase price, often leaving residents feeling trapped and with no alternative but to stay in the property rather than foot the cost of moving.
Ultimately, it is important that the client understands that usually they are not purchasing real property within a retirement village, but rather the right to reside in the property (usually under a lease agreement), and that it is a lifestyle choice rather than an investment decision to purchase into a retirement village.
If you are contemplating purchasing into a retirement village, or have entered into a contract for a retirement village purchase, the property team at Affinity Lawyers are experienced in this area of law, and would be happy to assist you with any enquiries you may have and guide you through the purchase process. Please contact our Gold Coast office today on 5563 8970 to discuss your needs today.