To live in a retirement village, a prospective resident enters into a contract with the operator. All retirement village contracts deal with a number of issues including the nature of the tenure (in particular long term lease, purchase or rental) and costs associated with moving into, living in, and leaving the village.
For people moving from their own home into a retirement village, the contract and financial model used can seem unusual or complex. A retirement village contract is different to contracts used to purchase a regular residential home or apartment.
One size does not fit all, either for retirement village residents or village operators. By negotiating a contract with the operator, the right “fit” between upfront and exit costs can be found for both parties.
The operator may offer:
- Freehold or strata title (operating in much the same way as a traditional residential property in that title to the unit is held by the resident)
- Lease or licence (where the resident pays an upfront entry fee, often known as an ‘ingoing contribution’, for occupancy of a retirement village unit)
- Company title
- Rental agreement
The lease or licence arrangement is the most common form of retirement village contract. The lease or licence tenure is secure, owing to the residency contract and government legislation designed to protect residents’ rights. A resident decides how long they want to live in the village, not the operator.
The ingoing cost will vary and is based on many factors, including the age and quality of the unit, and the location and facilities in the village.