Steps to buying a unit in a retirement village
Know the risks of retirement units as investments
Buying into a retirement village is not the same as buying an investment property.
You may face substantial costs when leaving a village. Buying into a retirement village is a lifestyle decision, not an investment to make money.
Living in a retirement village is not the same as owning your own home or renting. In most cases, you do not purchase the property title to the unit. Instead, you purchase a right to live in the unit and the right to benefit from the lifestyle facilities the village offers.
The cost of providing the unit and lifestyle generally exceeds the amount you pay when you move in to a retirement village. The village operator recovers the balance through an exit fee payable after you leave the village. This amount, together with other fees and charges agreed to when you moved in, are deducted from your refund when your unit is ‘sold’ to the next resident.
As a general rule, the deduction of the exit fee and other charges means the amount paid when you moved in is significantly reduced at final settlement, even though the market value of the unit may have increased.
The Compare retirement villages website provides example scenarios showing the potential effect of different village contracts and fee structures. It does not constitute advice, but shows some of the financial aspects you should consider.
In this guide:
- Know the risks of retirement units as investments
- Shop around
- Compare different villages
- Get legal advice
- Find out the costs
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