When there is confusion about the differences between retirement villages and over 55s independent lifestyle communities. It can be difficult to know which of these two housing models best suits yours needs. To help you with your decision, here’s an outline of their main differences and similarities:
Let’s start by setting the record straight; retirement villages are not residential aged-care homes. They are not part of the aged-care system.
Just like with over 55s independent living communities, people who move into retirement villages do so as a lifestyle choice. Not primarily as a way of receiving aged-care services.
Over 55’s Lifestyle Communities & Retirement Villages are similar.
- Provide housing for those aged 55 plus: whether they are working, semi-retired or retired.
- Are living options which offer a community of homes and facilities. These have been designed specifically for those who are still able to live an independent life in their own home.
- Are purpose-built for people aged 55 plus and so offer many lifestyle and practical living benefits. These include low-maintenance homes and gardens..
- Afford residents the opportunity to enjoy a strong sense of community living. Live amongst like-minded, mutually supportive peers who are at a similar place in life’s journey.
- Offer residents the reassurance of a safe and secure living environment. The community may be gated and/or have an on-site Community Manager. Furthermore you’re like-minded neighbours also provide further peace of mind, whether you’re at home or away travelling.
- Include additional facilities and services: such as a swimming pool, bowling green, library, function rooms. Inaddition to this organised social activities are usually arranged by the homeowners or various social committees.
- Provide ongoing maintenance of communal facilities and gardens.
There are similarities between retirement villages and over 55s lifestyle communities. Tthe choice is made reflects how the individual sees themself or their loved ones. This choice is also often indicative of how the prospective resident is engaging in work and/or leisure pursuits.
Retirement villages are geared towards older seniors. An over 55’s independent living communities are designed to attract a younger, more active, independent homeowner. Often one who wants to downsize and enjoy an entirely new, vibrant phase of their life. Typically over 55s lifestyle communities feature luxury, resort-style recreational facilities. Examples such as at those at Aviva Communities Officer and Aviva Communities Bendigo.
Contemporary over 55’s independent living community
Aviva Communities Officer is a contemporary over 55’s independent living community at which an invigorated lifestyle is facilitated. The Lodge – a stunning, modern, light-filled private clubhouse designed by award-winning architects Wolveridge.
The Lodge provides homeowners with unlimited access to 5-star luxury amenities. This includes an indoor heated pool, spa and sauna, a fully equipped gym, private cinema. Further inclusions are a billiards room, library, bowling green, and a stylish alfresco dining space. At the heart of the community, The Lodge is also a welcoming place for homeowners to relax and to connect. This can be with community neighbours, family & friends.
Due to their older demographic, unlike over 55s lifestyle communities, retirement villages generally cater for people requiring more support. They traditionally offer different types of in-home care services as optional paid extras. These include emergency call buttons, meals, cleaning and personal services, and doctor visits. Additionally, some retirement villages are located next door to (or even contain) aged-care homes. Often there is no direct connection between these two types of accommodation.
There is one key differences between retirement villages and over 55s independent living communities. It is the element of an up-front fee when you move in.
With retirement villages, as a condition of entering the village, the resident pays an up-front fee. This is by way of an ongoing contribution; which is in addition to the purchase price or lease of the home. Often, some or the entire fee is refunded when you leave. With over 55s lifestyles communities, there is no up-front fee charged.
Another significant difference between retirement villages and over 55s independent living and lifestyle communities is the housing agreement.
Depending on the options available at any particular retirement village you choose, you may rent your accommodation or buy it. There is a range of different contracts available which include:
- Strata title.
- Long-term lease.
- Unit trust.
- Periodic tenancy.
If you own your own home in a retirement village (rather than rent it), you have freehold ownership which means you own your own land. As a landowner, you have to pay stamp duty and council rates – in the same way you would if you purchased a standard house. You also have to pay owner’s corporation fees (body corporate fees). This is because these homes within retirement villages are strata title properties; meaning you have individual ownership over your home but also shared ownership of the land the complex as a whole sits on, plus all ‘common property’: such as the communal facilities, gardens and roads.
By contrast, to live in an over 55s independent living or lifestyle community, you purchase your home (renting your home is not an option) and you have leasehold homeownership. This means that residents own their home but they do not own the land it sits on. Instead, these homeowners rent the land their home sits on by way of a secure lease agreement which is generally for 90 years – although at Aviva Communities it’s for 99 years plus one year. It is for this reason that over 55s independent living or lifestyle communities are also referred to as land lease communities.
In the land lease model used by over 55s lifestyle communities, the benefits are many:
- Firstly, there are no body corporate fees.
- Homeowners may acquire two assets – the house, and the value of the lease for the land your house sits on. Even though you rent this land, as its value increases, so too may the value of your land lease. Furthermore, if you sell your home, you may receive any increase in value the land lease has acquired.
- In contrast to home ownership within a retirement village, as there is no transfer of land title, there is no stamp duty and no council rates.
- If eligible, you receive Federal Rent Assistance towards the rent of the land your home sits on.
- Since the particular over 55s lifestyle community owns the land and leases it to you, it maintains a long-term financial interest in the ongoing success of the community and so remains invested in looking after it.
In the land lease set-ups of over 55s lifestyle communities, a weekly site fee covers the cost of renting the land your home sits on. Unlike other places, at Aviva Communities Officer you are given the choice. Pay a Variable Weekly Site Fee that can change according to the Consumer Price Index or a market review. Or pay a Fixed Weekly Site Fee for added peace of mind.
The weekly site fee in over 55s lifestyle communities can also cover items including:
- Live-in Community Managers.
- On-site Community Management Team.
- Use of all community facilities: including pool and spa, gym, cinema and bowling green.
- Water and power for community facilities.
- Public liability insurance on all community areas and facilities.
- Electronically controlled security access.
- Fire prevention maintenance.
- At Aviva Communities Officer, all home electricity costs* (*subject to the Aviva Communities Officer Fair Use Policy). Gas is not used in homes in the community. Including energy charges in your Weekly Site Fee. This means you no longer need to worry about ‘bill shock’ and rising energy costs.
- Ongoing routine maintenance of common areas including all recreational facilities, buildings and gardens. Protecting your enjoyment of the community and the value of your investment.
The cost associated with both community management and the routine maintenance of common areas in retirement villages. This includes all facilities, buildings and gardens, is incurred as an additional expense. This is not the case with independant living communities like Aviva. This fee is usually charged weekly, fortnightly or monthly and it is in addition to the up-front fee mentioned previously (and where relevant, also in addition to a body corporate fee, stamp duty and council rates).
Lifestyle Community Exit Fee
The exit fee structure – that is, the amount residents pay upon leaving their retirement village or over 55s independent living or lifestyle community – differs for each of the two housing models.
Retirement villages charge an exit fee calculated using a combination of factorswhich include:
- How long you have lived in the retirement village
- What your up-front fee was
- The cost of a new resident’s up-front fee.
Upon selling their home in a retirement village, residents may also have to share any capital gains with the retirement village operator. In over 55s independent living or lifestyle communities, the difference here is notable and requires further explanation.
In over 55s independent living or lifestyle communities, upon selling your home there is only one exit fee which is the Deferred Management Fee (DMF). The DMF covers large-scale maintenance costs of the community for infrastructure items such as roads, stormwater drains and communal facilities. It ensures that the community is maintained to the highest standards over the long term – helping to protect the value of your investment.
The DMF is usually based on the re-sale price of your home, meaning the operator effectively takes some of the capital gain you may achieve. Futhermore it is a percentage determined only by how long you have owned your home – and you typically pay no DMF if you sell your home within the first year from your Settlement Date. If you sell your home within the second year from your Settlement Date or part thereof, the DMF is calculated as a % of the re-sale price of your home. From the fifth year onwards, the DMF is generally capped. Some land lease communities cap at 50%. Aviva Communities Bendigo caps at 20%. Regardless of how many more years you live in the community, you will not pay more than this 20%.
It is worth pointing out that in some land lease communities,. At Aviva Communities Officer, the DMF is calculated based on the purchase price. It is not based on the re-sale price. Tthe purchase price of your home will likely be significantly less than the re-sale price. Based on this. the DMF is significantly less at Aviva Communities Officer.
This also affords additional financial control and certainty. When you decide to sell your home, you will be able to determine the likely amount of your exit fee.
If you’re looking at a retirement village or an over 55s living community, take time to consider each model. They are different in terms of the lifestyle they enable, the housing agreements and other cost structures. Speaking with your financial adviser is important to ensure you choose the living option that best suits you. Consider terms of both your personal and financial needs – your future happiness is worth it.