9th Feb 2017
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Have you considered all your downsizing options?
Have you considered all your downsizing options?

Are you thinking of downsizing your home to finally pay off your mortgage and enjoy a more leisurely lifestyle in retirement? If it costs around the same as your net earnings from the sale of your old home – which it can easily do – simply buying a new apartment or unit in your local area may not actually free up enough cash for retirement. Once transaction costs (which include stamp duty) are included, you may even find yourself out-of-pocket.

This is where specialist over 50s and retirement properties should be considered, as they often offer an appealing lifestyle at a more affordable price point. You may even get away with not having to pay stamp duty.

New lifestyle resorts, vertical villages and retirement communities, with modern design features, more bedrooms, entertaining spaces and community facilities, now cater for active baby boomers. The price points vary, from low-budget, entry-level accommodation to luxury penthouses.

Amanda Graham, former lawyer and co-founder of specialist retirement property website SeniorsHousingOnline.com.au says that buying these properties is different to other types of residential property, so it’s important to seek legal advice first.

“These legal differences shouldn’t detract from the benefits of buying a retirement property, but you do need to go in with your eyes open to make sure there are no surprises down the track.

“There are various types of legal titles and occupancy rights involved, and you need to consider all ongoing costs, including what fees and capital gain share will apply when the property is sold later on. These all vary considerably from one property to another.

“Retirement villages are often leasehold title, or sold under a licence arrangement, although some are strata title, company title or community title.  Other common types of over-50s lifestyle communities include manufactured home estates with a combination of home purchase sited on leased land.  One of the benefits of such arrangements is that the occupier may be eligible for Government rent assistance.”

If you’re considering downsizing and would like to find out more about the options available, visit Seniorshousingonline.com.au

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    COMMENTS

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    Nan Norma
    10th Feb 2017
    1:27pm
    Moving to a unit or an apartment from a house will cost you more. There are rates and also body corporate fees which can be quite expensive. A friend bought a lovely house in a retirement village. There were no stamp fees. No entry or exit fees or water costs. She receives rent allowance from Centrelink. Her fortnightly cost is about $120 for sight fees.
    Puglet
    10th Feb 2017
    2:01pm
    I looked carefully at the pros and cons of moving to a 'life-style village'! I'm a self-funded retiree who is desperately trying to complete the Health Care Card application but will never be eligible for any other Centrelink benefits. . I worked out that by the time I sold my house and paid all the horrendous fees/taxes/stamp duties and bought the new one (more taxes and fees) and then started paying the very, very expensive corporate fees and charges plus the usual utilities I'd be about 80,000.00 worse off and then it would cost over 1200.00 month just to live in the apartment and I would still pay utilities etc. The small print was instructive - if I sold my apartment or needed higher level care I'd not get much back plus I would have to continue paying about 1500.00 a month corporate fees etc until it was sold. For 80,000.00 I can have ramps, railing, a wheel chair access bathroom, 24 hour personal alarms, someone to help with house work, gardening, showering, meals, taxis plus I can keep my dog and garden and I won't have to worry about the neighbours if I want to listen to opera. The advertising brochures are pretty and tempting but these companies are there to make money, lots of it!
    Old Geezer
    10th Feb 2017
    3:16pm
    Good luck with that Health Care Card application. I filled one out last week for a person which was so frustrating.
    niemakawa
    10th Feb 2017
    5:03pm
    On the point of the HCC I thought they were not means tested, so I wonder why the application form seems to cause frustration in completing it.
    CindyLou
    10th Feb 2017
    7:11pm
    Absolutely agree Puglet...my home is all one level, small ramps would be easy to install - and I'd much rather pay someone to do housework and other jobs around the house whilst enjoying and maintaining my lovely home.

    Last thing I'd want is to be "locked in" to anything - why would I move, I'd have to be crazy.
    Nan Norma
    10th Feb 2017
    10:08pm
    Puglet. Some people living in their home can't afford to pay for people to do the lawns etc.
    Lark Force
    10th Feb 2017
    3:56pm
    I agree with the above responses of Nan Norma and Puglet.
    We made the mistake of downsizing to a beautiful Villa in a retirement village. Thought we and the solicitor understood all the fine print. They don't make it easy if you want to leave.
    Get out a month before new occupant pays all the money, you have to rent till money is transferred to you. Sounds easy, try it! Refurbishment of the villa is carried out whether it needs it or not. Don't get me wrong I like older people but, you can feel that you are being dragged into old age if you are around too many for too long. As an active, reasonably fit person(73) on excursions I felt I was a carer to the less mobile people. Now that's not in the contract. Many people in these villages whilst supposedly independent, they are not.
    Instead of the monthly management fee you pay, you could be use it to hire a person to do your garden, lawns etc at your existing home.. The village I was in required you to get any appliance fixed or replaced at your expense. Any improvement you make, e.g awnings, gas fire became the property of the retirement company. When we left after just 17 months, it worked out that they made around 17% on their investment. That's not counting refurbishing. The saddest thing about the village is that when we told people we were leaving 6 couples told us that they would like to get out but couldn't afford to leave because house prices had gone up so much in the time they had been there, and what they would realise on the sale of their villa wouldn't be enough to buy one.
    It all looks good, nice indoor heated pool, bowling green, community bus for outings, function room and so on. Be very careful. Suits some people but not all, and if like us you make a mistake it may be hard to get out of it. In a few years we will be financially much better off than if we had stayed there. AND, you (and your estate) get the capital gain on a home not the high flying corporate executives of the retirement(building & construction) company.
    Nan Norma
    10th Feb 2017
    10:05pm
    Muzza, You really do need to do your homework when looking for a village. The upmarket seem to be the ones with all the conditions on them. They can be extremely expansive. Living alone in your own house can be very lonely, especially if you only have young people around you. In a "good' village there is always something going on. You can go out, without going out, for a women that's much safer. You can make many friends. Its all up to you. But you need to do your homework, ask around etc. I've visited quite a few villages, asked questions some managers didn't like me asking.
    niemakawa
    10th Feb 2017
    5:10pm
    The legal advice mentioned here will cost you an "arm and a leg". Think very carefully before considering downsizing to a "lifestyle" type of home. Many of the operators have a buy-back clause which means that if you want to sell in the future then you have only one option: that is to sell back to them and of course they will take a commission and more...............
    CC
    11th Feb 2017
    4:47am
    "Over 55's" villages have no exit fees and you pay no stamp duty when you purchase. You pay a weekly fee (around $150) and if you sell, any profit is yours to keep, less agents fees. You may also be eligible for Govt rent assistance. You just down own the land.

    Some of the newer ones are fantastic with pools, libraries, cinemas, bowling greens, tennis courts and lots of activities. You can join in or not, it's up to you
    Bonny
    14th Feb 2017
    8:56am
    Have your ever read one of their contracts? Most have defferred fees that they get when you sell plus a weekly fee that keeps increasing.
    CC
    14th Feb 2017
    10:10pm
    No deferred fees in the one I live in, if you sell, you keep any gain yourself and it's in our contract that the levies can only increase in line with CPI.
    Nan Norma
    11th Feb 2017
    10:11am
    CC is right. If you get any pension the first thing to ask is if you can get rent allowance in a particular Over 50's Resort or Village as if you can then the management or site fees will be so much cheaper for you. (check with Centrelink first) You don't have to have a solicitor. If you ask all the right question and read your contract carefully and do your sums you should be okay. These places are getting better all the time.


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