For a long time, exit fees on retirement villages were considered just another fact of life, similar to death and taxes.
An operator of a retirement village defers the payment of fees until the resident leaves, allowing the resident to buy into the retirement village at a lower price and giving them more cash in hand to enjoy their retirement life in a retirement villages with no exit fees QLD.
Exit fees are intended to cover the operator’s costs associated with the retirement village, including maintenance and refurbishment of the property, before it is sold to the next resident. The exit fees are deducted from the sale price of the property.
However, exit fees can impact the amount of money you will receive when you are about to leave the village; the final distribution of the money can be a little shocking in some instances due to a lack of transparency as to what fees the operator will be charging the resident.
At present, some of Australia’s largest retirement village operators are exploring alternative methods of paying for retirement villages that do not include exit fees, and there are calls for exit fees to be banned. And in Queensland, many operators are making retirement villages with no exit fees in QLD.
What Are Exit Fees In Retirement Villages in QLD?
Purchasing property at a retirement village is different from buying standard residential property in Queensland.
The main difference is that a retirement village operator charges fees for managing the property and for the lifestyle amenities included.
Most retirement villages charge exit fees in QLD, which are fees you pay when you leave the retirement village, and these are deducted from the proceeds of the sale of your residence. There is a variety of exit fees in Queensland.
Deferred Management Fees (DMFs) are charged as a percentage of the sale price of the property. A typical DMF might be 10% if you lived there for one year or 35% if you lived there for three years or more.
Ongoing charges might also be charged, which cover costs for maintenance, repairs, and insurance.
Some retirement villages in QLD charge a percentage of the capital gain on the property upon sale.
You may also have to pay real estate sales and marketing fees from the proceeds of the sale of your retirement village property IN QLD.
Clearly, the exit fees can quickly diminish the proceeds from a sale price.
Do All Retirement Villages Have Exit Fees in QLD?
No, there are some retirement villages with no exit fees in QLD.
What is making retirement communities offer new models of payment that do not include exit fees?
Due to the increasing number of retirement communities being built to cater to the ageing population, there is also more competition for the same pool of customers. In this more competitive environment, operators are exploring new ways to attract customers, and one of them is offering a no-exit-fee arrangement.
There are also some regulatory changes in the retirement community market.
As one example, National Seniors Australia is requesting that exit fees be banned in all new contracts at retirement communities.
Regulations do vary from state to state; however, there are new and stricter regulations regarding the amount that can be charged for exit fees, and the regulations regarding the timelines in which funds collected from the sale of the property are released are being introduced and updated in Queensland and around the country.
Land lease communities, which are an alternative to retirement communities, are also becoming increasingly popular. When you purchase a land lease property, you own the dwelling, but the owner of the land retains the land, and there are no exit fees when the resident vacates the land lease community.
The Advantages And Disadvantages Of Retirement Villages With No Exit Fees in QLD
Advantages
Transparent costs – No exit fee retirement villages are more transparent, allowing you to pay your fees upfront so you won’t have any surprises to deal with when you leave.
Disadvantages
However, there are some downsides. By paying more up front, you might be less willing to pay for services, as you might in the case of having to pay later at an unknown time. This possible issue could translate into a less desirable lifestyle.
If you are paying fees upfront, what will happen to those fees you pay if the retirement community shuts down or if something happens – will you lose your investment?
As seen, the significance of whether or not to pay exit fees is an important consideration in making this transition into a retirement village.
What Are The Financial Implications For Residents with Retirement Villages With No Exit Fees in QLD?
Retirement villages with no exit fees in QLD provide you with certainty – you know the up-front price, the monthly expenses, and how much you will get when you leave.
Though paying exit fees for the retirement village property might mean you start with more cash, they can erode your payout when you leave.
Choosing between either paying fees up front or paying an exit fee when you leave is an important consideration when moving into a retirement village and may require you to get some advice from a financial planner to help you with your decision.
Regulatory Landscape And Future Trends
There are sweeping regulatory changes occurring in retirement villages, especially regarding the looming issues of exit fees. The states are now introducing legislation to cap the amount of exit fees, as well as to regulate when proceeds from the sale of a retirement village may be paid to an owner.
Contracts for retirement village services are complex and legally binding, and too often, people entering a retirement village do not read all the details.
National Seniors Australia has asked all states and territories to improve transparency in retirement village documentation and contracts by expressly stating all fees in plain language and developing a timeline or fee table to show all exit fees in dollar terms.
They are also seeking to prohibit deferred management fees (DMFs) in any new contract for residential retirement village services.
While each state has its own retirement village statute, National Seniors Australia is calling for a common set of retirement village laws across national jurisdictions.
It appears further changes in this area will unfold.
Case Studies
Residents have three options to choose from:
Prepaid plans where you pay for the price of your property and an up-front management fee. When you leave the retirement village, you receive the sale price of your home, including any capital gains, minus selling costs, legal fees, and reinstatement costs.
Refundable contributions where you pay an upfront contribution that is repaid within 60 days when you leave, with no selling or management fees – some wear and tear or damage costs might have to be repaid.
Pay as you go, where you pay a security deposit which is repaid when you leave the village, a non-refundable establishment fee, as well as monthly instalments.
Significantly, one of Australia’s oldest and most trusted retirement village operators has introduced a no-exit fee from retirement villages in QLD.
Operators of modern retirement villages are offering no-exit fee contracts due to the benefits they offer to prospective residents. This is something you should explore when looking for a retirement village.
