Two companies offer village contracts free of fees

Retirees offered innovative contracts by some village companies … but not Aveo.

Fee-free retirement homes are here

The retirement village fiasco that blew up last June has been addressed by two of the three major operators, with the introduction of greater contractual flexibility.

In July, Australian Competition and Consumer Commission (ACCC) chairman Rod Sims said he believed there were grounds to investigate contracts issued by Aveo in a regime it calls the ‘Aveo Way’, to see if they were ‘unfair’.

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.

Those exit fees can be up to 35 per cent of the value of an Aveo property when it sells.

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.

However, Aveo, which is the only operator the ACCC has named as being under investigation, continues to use contracts with exit fees under a regime it has labelled as ‘The Aveo Way’. The contracts offer leaseholds rather than freeholds, which means the residents are tenants rather than owners of the units they occupy.

The only way to avoid paying the fee if you live in an Aveo village is to leave within six months of signing on. This cooling-off period is also offered by Stockland.

At the time of writing, Lendlease had not responded to questions about the nature of its retirement village contracts.

When Aveo was asked if it intended offering exit-fee free contracts like its competitors, a spokesman told YourLifeChoices: “Aveo continues to refine its Aveo Way contract regime in consultation with its residents and welcomes the introduction of new retirement funding models by others in the market to ensure Australians can enjoy the retirements they want to live.”

Aveo Chief Executive Geoff Grady told YourLifeChoices that his company had refined its contract since the spotlight was shone on some of its villages.

“We have reduced the number of pages from a previous 50 or 55 pages to 29,” Mr Grady said.

He explained that Aveo village residents had been surveyed about what they would like to see in a new contract.

“Our new contracts reflect what consumers wanted … what residents had told us they wanted to see in the document,” Mr Grady said.

Asked if residents had pointed out that they would like adjustments made to exit fees, he said the survey had asked people to nominate what should be included rather than excluded from contracts.

In an earlier statement to YourLifeChoices, Aveo said it was “progressively introducing its market-leading contract regime, the Aveo Way, that provides financial certainty and clarity to its residents and their families”.

However, when compared to the new contracts being rolled out by Aveo’s competitors, it appears that the latter are the ones leading the market.

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. We also offer a wide range of home types to suit all residents with the sale price of our units, villas, townhouses and homes typically below the comparable median unit or house price in the surrounding suburb or region.”

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.

A two-bedroom home at Stockland’s Aspire at Elara starts from $655,000, levies about $260 per month for services and there is no deferred management fee. A similar home at its Willowdale Retirement Village starts from $560,000, levies are $364 per month and the deferred management fee depends on which of the two above contracts is selected.

Do you live in a retirement village? Are you satisfied with the contract you signed? Would you consider moving to a village where the apartments are more expensive, but where there are no exit fees?

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    COMMENTS

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    Arisaid
    26th Apr 2018
    12:10pm
    No way would you get me in a retirement village. They are just money grubbers. They are there to make a profit through and through.
    casey
    26th Apr 2018
    1:25pm
    Dead right there. I'm staying in my own house until they put me in a box.
    johnp
    26th Apr 2018
    2:45pm
    Actually in all likelihood that "put me in box" will probably be a nursing home instead.
    Arisaid
    29th Apr 2018
    9:00pm
    Well, I'm donating my body to medical science so it's a body bag for me johnp.
    fearlessfly
    26th Apr 2018
    4:29pm
    Hello? Hello? Hello? Anybody at home at YourLifeChoices ? It irks me greatly that you have not deigned to mention GEMLIFE, who have neither entry or exit fees, no refurbishment fees nor do they take any of the money you may get on selling your home on exit. Get up to speed you guys - go to www.gemlife.com.au and include them in any further articles about retirement homes !
    Blondie
    26th Apr 2018
    5:33pm
    Stay away from these dreadful places.....' Age In Place' can assist you to remain in your homes....check on line fro 'Home care Packages'....they are great!!!
    Blondie
    26th Apr 2018
    5:37pm
    Sorry, fearlessfly.....checked out gemlife.....not operating anywhere I'd like to live!
    leek
    27th Apr 2018
    10:20am
    Well I am a Retirement village. Very old style, original owners. I own the land as well. Low maintenance fees, but have exit fees. I know that and told my kids I will be looking after them now while I can, so they are not relying on me to die. I moved in last year at 58 years of age. This village has a great community life- mainly organised by the residents themselves. As a woman on my own, this is the best way to live. I have maintenance men come in and change my light globes, fix taps, broken doors. they also maintain the village as a whole. If I was living on my own at home, i would be waiting for the phone to ring. no way Hose! I have my privacy here(enclosed backyard) but I can get out and do as much as I want in the village as well. I still work as well. Everybody in this village is so happy to be here, that all we often do is sit around and bag other villages. I will go as far as to say that I am Blessed to have found this village.
    fearlessfly
    27th Apr 2018
    10:25am
    You are indeed fortunate Leek, your experience is what we are expecting when we move to Gemlife Woodend later this year.
    leek
    27th Apr 2018
    10:25am
    I also forgot to say that my lawyer told me that "on paper" it is the best retirement village she had ever seen. And she has placed a lot of people into retirement villages.
    Jennie
    27th Apr 2018
    2:18pm
    Please tell us leek what retirement village you are in.
    leek
    29th Apr 2018
    3:06pm
    Jennie- In dandenong. Valley Village Mews. near the Dandy hospital, and loads of medical places, public transport. Public bus even takes you to the airport(tulla) We have our own bus that goes to the shops twice a day(mon-fri)
    leek
    27th Apr 2018
    10:33am
    I would be wary of places that do not charge the exit fees. my friend is one and pays twice the amount of maintenance fees, to a point shere the average pensioner would struggle to live there. Yet they are no exit fees. her maintenance men are not allowed inside the home so she has to pay somebody to change her light globes etc. if she cannot do them, and she can't due to her health. There is no grass at the place. I have done the sums$$ and it just doens't add up how this type of village can actually make money. Something doesn't make sense to me! So ber very wary of these newer places. they will actually cost you are lot more money to live in them whilst you are lving in them.
    leek
    27th Apr 2018
    10:44am
    Forget about the talk about $$. Living in a retirement village is about being part of a Community. The community organises outings for the everybody. A new guy here has organised footy tipping, another lady wanted to walk once a week, so she organised a walking group, another guy wants to organise a music/coffee afternoon. we have happy hour once a week, and you don't have to be a drinker to go, quite a few have a cup of tea. the list goes on. If you are a people person, then a retirement village is the place to with like minded people. You don't have to even be involved. Our maintenance fees also includes a alert button that we can wear around our necks etc.. I know for a fact that they actually cost about $35 a month if you have them in your own home.
    Golden Oldie
    27th Apr 2018
    2:43pm
    I live in a new 4 bedroom home that was purchased for a lot less than 2 bedroom dogboxes offered by the retirement villages. Also, own home has no exit costs, just capital gains depending on the housing market over time. Costs of rates etc. probably less than the monthly management fee charged by retirement villages.
    Olga
    27th Apr 2018
    10:20pm
    Hi. Olga here... great to see such diversity. Depending on your needs, expectations... retirement village life can be a good thing... but if you happen to live in a village with an unempatheic manager, as my mum did, then the experience is likely to be sub optimal, sadly. Aveo need to choose and screen village managers more carefully and train them to be client and not company focussed