In Western Australia, different ownership and occupancy rights for those buying into retirement villages all depend upon the contract signed between the resident and the village.
Some contracts are in the form of a lease, which gives signees a long-term right to occupy, but they never own the premises.
Leases are commonly used by developments in WA, as they are touted as the most practical and cost-effective method for residency contracts.
The lease grants a person the right to enjoy the lifestyle amenities of a village, whether this be a pool or a gym. It also means they do not have to be responsible for any major building problems such as structural repairs or defective cladding.
Another financial benefit of a lease is that, subject to assessment, there is normally no stamp duty applicable on what you pay upfront.
One such village which uses this kind of arrangement is Altum Northerly, which is an apartment development under construction in Scarborough for the over-55s market.
Altum Living Owner and Builder Michael Lawson said these lease for life arrangements could sometimes get a bad rap.
“I think lease for life can be something people are afraid of,” he said. “I think in the marketplace it probably has a negative connotation, but it really shouldn’t have.”
Mr Lawson said for most communities like Altum, the ingoing payment you make when you move in does not cover the full cost of the development and the reasonable financial return required by the operator.
As a result, when you eventually leave the development, you are required to pay an additional amount which Altum refers to as the deferred fee.
However, Altum offers a choice for residents – if you don’t want to worry about paying money in the back-end, you have the option to pay an upfront fee.
“I say to people, if you don’t want any fees on the back-end, you can pay the 20 per cent extra upfront, which is equal to what you will pay at a rival apartment block that is strata titled,” Mr Lawson said. “So it gives people the option to do one or the other.
“There are some real benefits to it. It typically allows people to buy in at a discount to the market than what the regular market is, and you are probably going to buy in at 20 per cent discount on average.
“What it does is if you are buying at a discount on the market, when you do leave, you have to pay for that at some stage.
“But what it allows you to do is pay for it at the back-end.”
If you have any questions about lease for life arrangements, or any general questions about retirement living, Altum Living are hosting an information session with industry experts on Thursday August 27 from 5-7pm at Marmion Angling and Aquatic Club. RSVP to Mr Lawson by Tuesday August 25 via email or phone.
Contact: Altum Living
Michael Lawson, 1300 095 757, firstname.lastname@example.org