Retirement villages swallow vulnerable people’s money.
In an article published by The Senior online magazine, one person who suffered at the hand of a village operator described retirement villages as a "Get Poor Quick Scheme".
Retirement village information for consumers.
Retirement villages swallow vulnerable people’s money.
In an article published by The Senior online magazine, one person who suffered at the hand of a village operator described retirement villages as a "Get Poor Quick Scheme".
The following is an article published in the September newsletter of the consumer and advocate body Residents of Retirement Villages Victoria.
A report from the NSW Retirement Village Residents Association shows over 40% of people in retirement villages have experienced abuse.
"The Retirement Village Residents Association (RVRA) developed and distributed a survey on psychological abuse to all its members and some 120 retirement villages throughout NSW. The RVRA is not aware of any previous studies of the impact of psychological abuse solely within retirement villages that excluded external triggers such as financial abuse and neglect. Other studies psychological abuse with a broader range of elder abuse topics, and cover the broader senior cohort of aged care, community housing and general over55 living situations.
Over 40% (n=512) of the respondents reported experiencing at least one type of abuse. The proportion of females reporting abuse was higher (44%) than for males (34%). The percentage of the younger age groups in the sample reporting abuse was much higher (48%) when compared with the older groups (28%)."
See the full report here - https://www.rvra.org.au/news/news-articles/2023-06-15
Many residents in retirement villages are being taken advantage of for items in their units where they are arbitrarily being made responsible to pay for repair and/or replacement. Retirement Villages come under Victorian law whereas aged care facilities come under commonwealth law. Regulation 11(1h) under Victorian law requires a village operator to list the relevant fixtures, fittings and furnishings in the contract before the contract is signed. If you are a resident in a Victorian retirement village paying for repair or replacement of fixtures, fittings or furnishings not listed in your contract, seek advice now from a local free legal advice service, your solicitor or Consumer Affairs.
The current Retirement Villages Act 1986 is under review by the State Government, if this matter is applicable to you or there is another matter of concern to you make those concerns known to your local State Government representative.
Retirement Villages = 'The transfer on intergenerational wealth, not to families, but into the hands of corporations. Shame about elderly people not having enough money for Aged Care.' - Tom Gait
Retirement Villages and the Destruction of Retiree Capital
A primary feature of Loan/Lease Retirement Villages (74% of the marketplace) is that despite the payment of an ingoing amount, an amount often commensurate with or near to an outright purchase price, the retiree never obtains ownership. Note below the dramatic negative financial impact this aspect has on retiree capital as opposed to outright property ownership. Retirement villages are the least understood of residential property by retirees and their professional advisors. Governments have the obligation to continually improve protections for retirees and their hard earned life savings, including those who choose a retirement village as their preferred retirement living option. The solution is clearly in an outright property ownership model.
Model 1. Loan/Lease retirement village with Deferred Management Fee calculated on the ingoing value of the unit. No share of any capital gain is provided to the retiree. (49% of loan/lease marketplace)
After just 7 years the above Loan/Lease retirement village resident is $1,194,983.00 – $705,040.00 = $489,943.00 worse off than a retiree with outright property ownership. A reduction rate rate of some $1,346.00 per week of village occupancy.
Model 3. Outright Property Ownership - Well understood by retirees and their professional advisors.
Property ownership delivers superior financial security to retirees, it enables them to -
Real retirement village reform is desperately needed before many, many more retirees are condemned to the destruction of their life savings. Destruction over just a few years of their retirement by a single fateful decision, a decision to enter a loan/lease retirement village.
“Families need to be aware that what we are talking about here is the transfer of intergenerational wealth, not to families, but into the pockets of corporations. Shame about elderly people not having enough money for aged care” – Tom Galt, President – NSW Retirement Village Residents Association.
Which retirement living model would you choose?
-$722,983.00 – 7 years of occupancy in a Loan/Lease Retirement Village no capital gain
-$489,943.00 – 7 years of occupancy in a Loan/Lease Retirement Village with capital gain
+$394,983.00 – 7 years of occupancy with Outright Property Ownership
Note – The tables behind these calculations are included below for reference.
Model 1 - Loan/Lease retirement village with Deferred Management Fee calculated on the ingoing value of the unit. No share of capital gain to retiree.