Two Retirement Village Operators Offer Alternative Contracts

YourLifeChoices reports that two retirement village operators offer alternative contracts.

"During last year’s joint Fairfax/Four Corners reporting of alleged unconscionable conduct by Aveo, revelations surfaced about residents who said they had been ‘gouged’ by exit fees – otherwise known as deferred management fees – when they left the villages.

In response to the fallout, Stockland and Lendlease, which between them own 136 retirement villages, have introduced a variety of new contracts, some of them without exit fees.

According to a report in The Sydney Morning Herald, Lendlease has introduced “four financial models at 15 of its 71 retirement villages, with plans to extend them across the board after market feedback. Lendlease would still offer its existing contract, whereby a person buys a unit then pays a deferred management fee at the end. The three new options include a pre-paid plan, a refundable contribution and a pay-as-you-go model”

Stockland Chief Executive of Retirement Living Stephen Bull told YourLifeChoices in a statement: “One of the key differentiators of our retirement living business is that we make it affordable to move in, and affordable to live in a Stockland retirement village."

The company has three types of contracts:

• the Peace of Mind contract has a deferred management fee that maxes out at five years or 25 per cent of the initial price paid from the home. In addition, Stockland covers all renovation costs and residents will be repaid after a maximum of six months from departure even if their home hasn't yet been sold.


• the Capital Share contract offers the resident the opportunity to share in 50 per cent of the capital gain of the property. In this contract, the residents deferred management fee reaches its maximum at seven years or 35 per cent in total.


• the Aspire product, which will be offered at two villages currently under construction – one at Elara, in Marsden Park, Sydney and the other one is in our Calleya Community near Perth in WA. It has a higher entry fee, but no exit fees."

Read the full story here:- Two companies offer village contracts free of fees

Two Retirement Village Operators Offer Alternative Contracts

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Lendlease Leads With Retirement Village Innovation

Lendlease leads with Retirement Village innovation, the Weekly Source reports:-

"Following 12 months of testing, Lendlease has revealed its consumer choice of four retirement village contracts:

1. Traditional DMF – “Hold on to your cash now by deferring payment of fees until you leave the village”;


2. Prepaid Plan – “Enjoy the certainty of paying the management fee upfront when you enter the village. Retain capital gain”;


3. Refundable contribution – “Feel secure knowing your money is guaranteed and don’t pay a management fee – instead pay a higher contribution on entry that is refunded when you leave”; and


4. Pay As You Go – “Pay a monthly contribution rather than a lump sum management fee”.

The detail on each plan.

Traditional DMF

Average of 30-35% DMF on the resale price after seven years. 1-2% sales commission. $10-15,000 refurbishment fee with option to upgrade at between $50-70,000 to maximise resale price.

Prepaid plan

Pay an upfront fee of around 18% and receive 100% of the sale value when leaving the village (less reinstatement costs, selling costs etc). For example, a $500,000 DMF home will cost $590,000 upfront. After 10 years if it sells for $1 million the departing resident will receive the $1 million.

Roughly one in five customers have taken this option over the 12 month test.

Refundable contribution

Pay a higher ingoing contribution and Lendlease will provide a ‘money back guarantee’ on a set amount when you depart. An example is a $500,000 home may have a $650,000 guarantee when you leave, paid within 60 days. There are no selling fees at the end but you do pay an upfront establishment fee of 3% ($15,000 in this example).

In addition to certainty for the family on the cash settlement, there is the certainty of funding residential aged care.

Pay as you go

Developed for customers (and their families) who may not wish to sell the family home or are managing their investment income.

Still under the Retirement Villages Act, they will receive a lease (currently five years) and pay rent with no upfront payment and no departure fee or payment.

The rent will be above the local market, reflecting the community facilities enjoyed and management support. They will also pay the same ongoing fees as the rest of the village residents on top of their rental fees.

The ‘pay as you go’ alternative is currently only available for serviced apartments during the test phase but is intended to be rolled out to the wider village home market."

Read the full story here:- Lendlease to lead consumer RV innovation with DMF alternatives

Lendlease Leads With Retirement Village Innovation

Lendlease's New Retirement Village Contracts

The Sydney Morning Herald reports:- An article by Rachel Lane from Aged Care Gurus on Lendlease's New Retirement Village Contracts.

"These new payment alternatives are more like the options you get when buying a mobile phone or a luxury car. Lendlease said it came up with the options by researching the market, including consumers who rejected the current offering. The feedback suggested that for some people a capital gain was important, others wanted certainty they'd get back what they'd paid, and a third group desired the ability to pay month by month.

So what are the options?

Lendlease will still offer its current contract, whereby you pay an ingoing price and when you leave you receive the sale price, less a deferred management fee of up to 35 per cent of the sale price, and any reinstatement fees and selling costs.

The first alternative is a prepaid price whereby you pay the management fee upfront (about 18 per cent of the purchase price), you still pay reinstatement fees and selling costs at the end but you receive all of the capital gain (or loss).

The next option is a refundable contribution whereby the amount you pay is refunded in full within 60 days of leaving. With this option a non-refundable establishment fee of 3 per cent is charged upfront.

The final option is to pay as you go, whereby you pay a monthly charge and a security deposit equal to 24 months' “rent”. The security deposit is refunded to you within 60 days of leaving the village. There is an establishment fee equal to three months' rent. Currently this option is only available on serviced apartments.

How does it affect the price?         Read the full story here:- Doing the sums on Lendlease's new contracts"

Lendlease's New Retirement Village Contracts