Compare Communities - Australia’s First Choice, when comparing Retirement Villages. Compare, select and save up to $15k in your next move in life. 1300 190 547
Compare Communities - Australia’s First Choice, when comparing Retirement Villages. Compare, select and save up to $15k in your next move in life. 1300 190 547
on the Friday, August 18, 2023
In recent years, the allure of retirement living has grown significantly among Australian seniors, with a noteworthy 5.7 percent of those over 65 choosing the vibrant lifestyle offered by retirement villages. Projections indicate that by 2025, this percentage will rise even further to 7.5 percent (Retirement Living Council, 2014).
This increasing attraction to retirement villages can be attributed to the appeal of close-knit communities replete with amenities like swimming pools, walking trails, restaurants, and bowling greens. However, the financial aspect, especially concerning exit fees, often raises questions and concerns.
Exit fees, also referred to as Deferred Management Fees (DMF) or Departure Fees, are costs incurred when departing from a retirement village. As a new resident, you initially make an Entry Payment, akin to the property's market value. Additionally, there are fortnightly fees to cover general maintenance, analogous to strata levies. The crucial element to grasp is that these exit fees are deducted from the Entry Payment upon leaving the village.
For those residing for over six years, the exit fee typically amounts to around 30 percent. Alternatively, if you depart before the initial six years, the exit fee usually equates to five percent for each year spent in the village.
Several compelling reasons exist for retirement village operators to implement exit fees:
Subsidising Recurrent Charges:
Exit fees play a pivotal role in maintaining affordable recurrent fees in line with government pensions. These fees underwrite the village's upkeep, sparing residents from unexpected maintenance expenses.
Investment in Village Upgrades:
Exit fees cover the substantial costs required for ongoing improvements and expansion of village facilities, ensuring enduring benefits for residents.
Enhancing Financial Flexibility:
Operators often offer tailored financial options around exit fees and entry payments, rendering retirement living a more feasible choice for retirees.
You can choose to avoid or reduce exit fees by opting for a higher initial lump sum payment when entering the retirement village. This approach offers flexibility, enabling customisation based on individual circumstances. Consulting a financial planner is recommended to determine the most suitable option.
The nature of your ownership agreement impacts the exit fee. Different forms of ownership, such as Lease Hold, Strata or Community Title, and Loan License Agreement, result in varying exit fee structures. The Loan License Agreement offered by BaptistCare, for instance, assures residents a range of benefits including no stamp duty, fixed returns, and no refurbishment costs upon departure.
Questions? BaptistCare’s friendly team is just a phone call away or reachable via an email inquiry. BaptistCare are dedicated to enriching communities through trusted services, evident in their legacy spanning the retirement living, aged care, and community care sectors since 1944. With a commitment to excellence and creating a positive impact, BaptistCare stands resolutely for quality and community enhancement.
