AVERAGE MONTHLY SERVICE FEES = RETIREMENT VILLAGES
THIS TIME 7.30 is looking at …
-how difficult it it is to move out of retirement living
-how it is really not a purchase, but ‘a long term rental’
ONCE again the big end of town are into it up to their arm pits, the story covering a Lend Lease retirement property … run by the same people who run shopping centres with similar and familiar sharpness …
Indeed it seems the whole Build to Rent concept is yet another vehicle for a few well set-up players to make a motza from those less fortunate …
LOOKS like the developer lobby … the Property Council are already anticipating a 50 per cent increase for retirement villages …
IS this industry relying on the Public suffering from memory loss?
IT was only 2 years ago when ABC Four Corners released its Report “Bleed them Dry until they Die!’
Retirement village residents unhappy about complex contracts and fees
The aged care royal commission has uncovered some shocking stories about the treatment of older Australians.
But the housing that many older Australians depend on, retirement villages, falls outside its scope.
- There are more than 68,000 retirement units across Australia in villages and serviced apartments
- About 62 per cent of those moving in are older women
- Over the next 15 years the number of Australians aged over 65 will increase by 50 per cent
About 200,000 Australians live in these villages and rely on the support they provide.
But some are paying dearly to do so, signing up to complex contracts and worrying that the money they are spending now may leave them unable to afford aged care when they need it.
Judith Brand, 82, has lived at the Classic Residences Retirement Village in the Melbourne suburb of East Brighton since 2012.
After seven years, she says she is stuck in a retirement village she no longer wants to live in.
“I badly want to move out,” Ms Brand told 7.30.
Ms Brand chose a real estate agent working for the village managers, Lendlease, to run a sales campaign for her two-bedroom unit, which was initially on the market for $880,000.
But after 15 months on the market, and a seven-month period with no inspections at all, she is frustrated with Lendlease and says the stress of trying to sell her unit is having an impact on her health.
“I’m not sleeping well, because I toss and turn and think of anything more I can do to sell it,” she said.
Ms Brand said she recently had three small strokes. While her health has deteriorated, she has watched the sales agent for Lendlease sell dozens of other similar units.
“I am feeling more and more hopeless,” she said.
“I might as well be chained to my bed with a steel chain. I’m absolutely trapped.”
In a statement, Lendlease said it had sold 40 residences at the village in the past 12 months.
“Under contract, all property owners are entitled to seek the agency services of external parties and to set their own prices. Mrs Brand was aware of this, but chose to use Lendlease sales agents,” the statement said.
“Mrs Brand also set the price for her property.”
‘Silver tsunami in the Australian population’
*The Property Council’s Ben Myers said over the next 15 years the number of Australians aged over 65 would increase by 50 per cent, but they might not have access to the housing they will need.
“There’s a huge silver tsunami, if you want to put it that way, in the Australian population,” he told 7.30.
“We’re just not really thinking about housing supply, what older people are going to need in our community.”
The latest industry data from the Property Council shows there are more than 68,000 retirement units across Australia, both in villages and serviced apartments.
About 62 per cent of those moving in are older women. The weighted average age of those moving in to villages is 72.7 years.
Mr Myers said the current retirement housing stock would not come anywhere close to meeting future demand.
“The supply of purpose-built seniors housing in Australia is really slipping behind the growth of the population,” he said.
But there is a broader question about the fees and charges associated with retirement villages.
The monthly service fees on these properties are not cheap.
For a one-bedroom apartment, the average service fee is $500 a month, for a two-bedroom apartment it is $536 a month, and a three-bedroom apartment is $553 a month.
While the average two-bedroom unit sells for $438,000, residents are usually expected to renovate before they sell, which in some cases can cost upwards of $80,000.
On top of this and other charges, the vast majority of villages charge so-called deferred management fees when the unit is sold.
This can mean about a third of the sales price of a retirement unit is retained by the village managers.
Mr Myers said it was a fee structure that people sometimes found confusing, but he said the vast majority came to understand the model before they signed up to a retirement unit.
“The key thing is to direct people to get good advice so there is no uncertainty,” he said.
“The one financial model that has stood the test of time has been the deferred management fees.”
‘You don’t own it’
Macquarie University economist Tim Kyng started looking into retirement villages after examining the accommodation options available for his 85-year-old mother.
He said retirement village residents often wrongly believed they owned their retirement unit.
“The way the contracts are worded, and the way the sales tactics work, they try to make the customer believe that they’re buying the apartment and they own it,” he said.
“The fact is, you don’t own it. It’s really a long-term rental arrangement.”
Mr Kyng decided retirement villages were not a good deal, and that the sales tactics were confusing.
“I found it was really difficult to get them to give us a copy of the contract, or to get them to give us the details of how the fee structure would work,” he said.
His experience led him to develop his own comparison website called the Retirement Village Calculator, so people could find out what the various fees and charges would mean for them.
“A lot of people are happy living in retirement villages. But the ones who are unhappy, it’s very difficult for them to exit the arrangement,” he said.
‘A few major things went wrong’
When Les Scobie and his wife paid just over $200,000 for their retirement unit in the Victorian town of Wangaratta, they were hoping for a quiet life.
They knew that if they decided to sell up and move on, the operators of the village would keep about a third of their money in exit fees.
“The part that we didn’t understand when we came in, was how little protection there was for you if something went wrong,” Mr Scobie said.
“And unfortunately, at this village, a few major things went wrong.”
The former bank manager discovered he and other residents had been wrongly charged a combined total of more than $300,000.
So, on behalf of hundreds of residents at the village, Mr Scobie took on the local Anglican diocese, which ran the village at the time, and won back most of the money.
Mr Scobie said retirement village residents were often vulnerable, especially when their health deteriorated and they needed to leave the village and go into aged care.
He said retirement village residents needed to make sure they were not taken advantage of.
“The industry really needs to be tipped upside down,” he said.