Retirement Village Unit, Rent or Home Ownership

There are two primary issues impacting older Australians in relation to retirement villages:-

1. The reduction in value of the capital base of older Australians having entered a retirement village.


2. The visible and the not so visible transfer of capital value from older Australians to retirement village operators.

Which option has the largest negative impact on my capital base?    A Retirement Village Unit, Renting or Home Ownership.

The following table gives an example of the potential financial impact over three different residential accommodation scenarios.

This is the view for a potential resident proposing to lease (not own) a unit in a retirement village governed by the retirement villages act, the following table compares three popular options for older Australians.

1. Sell the family home and enter a Retirement Village under a lease arrangement,


2. Sell the family home, invest the capital amount received from the sale and rent a unit within the community,


3. Stay in the family home.

After the first 7 year period the table shows the impact on the original Capital Value of $500,000.00:-
Column 1. Retirement Village – the impact is minus $275,000.00 capital to a lower value of $225,000.00
Column 2. Rental Unit – the impact is minus $70,000.00 capital to a lower value of $430,000.00
Column 3. Family Home – the impact is an increase of $210,000.00 capital to a higher value of $710,000.00

The parameters for the table above are:-
Deferred Fee Period – 3 years
Deferred Fee Rate – 35%
Capital Gain Rate – 42% flat over 7 year period
Capital Gain Share– 100% to operator
Unit Turnover Period – 7 Year Average