Retirement Villages.. Preying on the Elderly?

[Stangman]

Has anyone here had any experience with Retirement Villages?

Seems an absolute rip off to me.

My mother wants to move into an independent unit at a Retirement village because her current home of some 45 years is now too big for her to handle. The yard is too big and the place requires a reasonable amount of maintenance on a regular basis.

Sister has been taking mum to different Villages to see what is on offer. Mum has picked out the unit and Village that she prefers. So far so good.

Purchase price of the unit was quoted at $340K plus a weekly fee of $120 which covers Council Rates, Water Rates and Maintenance. OK with all that.

It is a new Retirement Village run by a "not for profit" !!?? organisation.

The reason I think it is a rip off concerns so called "Exit Fees". My understanding as it was explained is that for every year mum lives there they take 7% of the purchase price up to a maximum of five years. Mum negotiated this down to a purchase price of $318K, but in turn they will now take 7% per Annum for six years. Ouch!!!

What it boils down to is this- After 6 years of mum living there and after her departure and the unit is sold, after all exit fees and charges are deducted her Estate would receive back only 45% of the initial purchase price.
EDIT - I have been informed that 50% of the initial purchase price would be returned after a sale - not 45%

NOT the current sale price but her initial purchase price!!.

After doing a bit of maths this tells me that it is actually going to cost her $22,260 per annum ( 7% of $318K ) + $3,816 after rates from the weekly amount of $120.
This is a Total of $26,076 per annum or $501.46 per week for the first six years!!!!

Am I missing something or is this just a complete rip off?

Stangman.

 

[TMNT]

as far as I know each state has a different interpretation of 'retirement village" ie some have a 24/7 nurse on call, some are simply a collection of houses, some are a collection of houses that only old people can live in etc. etc.

which one is yours?

 

[pully]

definitely get independent advice before signing any contract. also have a very clear understanding about what all the costs mean, now and into the future.
it really is only a licence to occupy not ownership of the property. also the monthly fees can change over time. some find it expensive to get entry fees back, say if needing to move to long-term care when their health status changes. it can take along time to sell the license to occupy to someone else plus renovation costs between occupiers are usually passed on. bonds to enter long term care can be expensive and as said getting your entry fee back can take along time.
proceed with caution many are good operators some are not. there maybe other options for your mother.
but yes many of the new villages look attractive just be clear about all the costs. basically people are paying for the perceived convenience. some have good experiences some do not. good luck.

 

[Stangman]

Hi TMNT, The Retirement Village in question is simply a collection of some 50 independent villa homes for over 55`s.

There is no nurse on call but I believe there is a manager on site.

Apparently mum has already received a copy of the contract in the post and the Retirement Village Representative is coming around on Monday expecting mum to sign it subject to the sale of her home. Not going to happen. At the least we will have the contract reviewed by a solicitor prior to mum signing it - hopefully he can talk some money sense into her.

I have been searching Google about Retirement Villages in general and am finding similar concerns - Exit Fees weighted heavily toward Village operators
Link -
http://www.blog-findmyretirementhome.com.au/tag/retirement-villages/

Another major concern is when people in these Villages can no longer fend for themselves and need to go into a Nursing Home. The Entrance Fees for Nursing Homes are considerable. If they have lost 50% or more of their Homes Value how on Earth are they going to pay for the Nursing Home unless they have considerable savings behind them. I think most people rely on proceeds from the sale of the family home. This is a major reason I am going to push for mum to find a new or near new villa home in the same general area to where she lives now ( North Eastern suburb of Adelaide.)

Stangman.

 

[Stangman]

definitely get independent advice before signing any contract. also have a very clear understanding about what all the costs mean, now and into the future.
it really is only a licence to occupy not ownership of the property. also the monthly fees can change over time. some find it expensive to get entry fees back, say if needing to move to long-term care when their health status changes. it can take along time to sell the license to occupy to someone else plus renovation costs between occupiers are usually passed on. bonds to enter long term care can be expensive and as said getting your entry fee back can take along time.
proceed with caution many are good operators some are not. there maybe other options for your mother.
but yes many of the new villages look attractive just be clear about all the costs. basically people are paying for the perceived convenience. some have good experiences some do not. good luck.

Hi pully, Thanks for your reply.

You have put it in perspective very well and we will certainly take your advice on board.

Stangman.

 

[beachgurl]

My grandmother lives in a self care villa with a similar set up. Once her 6 year period was up she would regularly receive visitors from 'friends of the caretaker'. Turns out they were prospective buyers of the villa now that my nanna's occupancy is less lucrative for the village. The same establishment also has an assisted care hostel on site and for her to move to that part (which she has been encouraged for many years), the while process of "ownership" starts again. So the village gets two opportunities to rip nanna off. I know they need to make money and all but if the occupants are paying a fee they shouldn't also lose equity.

 

[Stangman]

Hi beachgurl, Thanks for letting us know of your grandmothers experience in her Retirement Village. Lets hope she lives a long and healthy life in there.
Totally agree that the occupants should not lose their equity.

Well... I have spent the last few hours on Realestate.com looking for suitable Courtyard/Villa homes for mum. Have listed about half a dozen to check out tomorrow. Just hope I can convince my very headstrong mother to come along. I think once she realises it will cost her over $500 per week to live in the Retirement Village it may hit home.

What really gets me about all this is that the government interferes in every aspect of our lives and businesses, yet they let the elderly get taken for a ride like this. Makes me wonder how many politicians may have an interest in these Retirement Village Scams.

Stangman.

 

[Angel]

An alternative to a retirement village

My mother bought herself a normal villa last year in a normal complex full of people of all ages. She paid normal market price , she pays normal BC fees, a gardener looks after the gardens and someone cleans the pool. When she wants to move onto somewhere else, she will sell it for normal market value at the time, and wont pay anyone anything except a commission to the real estate agent. There is no nurse there but she doesn't need one. There are genuine home nursing services for people who really require them anyway.

I don't see any way she can be ripped off in this scenario. What does a retirement village have to offer that my Mum's complex doesn't? Before anyone says 'entertainment" or "social life", well she lives one street away from the bowls club and five minute's drive from the RSL. My Mum's friends live either in the same complex or within the surrounding streets. Please ask her: what does your Mum think is so good about retirement villages? I really hope she changes her mind.

 

[geoffw]

My parents were in one of these places for a number of years before they required a higher level of care.

What it provided for them was an intermediate level. The facilities were purpose built for people who may have had difficulties- no stairs, easy access shower and toilet, close monitoring (health alert cord pull and smoke alarm- the day after my dad moved out I burnt the toast and got a phone call). They owned the unit but fees were deducted when they sold.

It was also very close to the care facility so that when my Mum had to go in my Dad could walk over and visit her every day.

They were in a good financial position for all of this and went in fully informed. It took a bit of a push though when it was time to go into care.

 

[pully]

from what I can gather each state has different rules re these facilities. also not all so called retirement villages are run the same way. Some offer other services for a fee, meals, laundry etc.

some are next to long term care facilities but it cannot be assumed a bed will be available when required for a seamless transfer process. aged care is a complex and can be an expensive process to enter.

self funded aged care is going to be a reality and more common in coming years. selecting quality is going to be important. those with caring advocates will be fortunate. retirement villages certainly serve a purpose but caution is required to be fully informed of what is actually being purchased.
as said in many cases a person is simply paying a license to occupy, no equity in the property occurs. each situation will be different and independent advice before signing is advised. it is not uncommon for some facilities to offer the service of their legal advisor to give advice...and some will also offer the services of financial advice.
proceed with caution.

 

[Stangman]

Unconscionable Contracts

Came across an article about Retirement Village Contracts written by Ben Hills and published in the SMH on the 12th Feb 1992. So this has been going on for a long time.

In the article - Former Supreme Court Judge Fred Myers describes his contract with a Retirement Village as "Unconscionable". It could be argued that it was not very smart of him to sign the contract in the first place!

He was up in arms about being charged 3.5% per annum up to a maximum of 35%. Seems the greed of the modern era has taken over. In my mothers case it is now 7% up to a maximum of 50%. Figures are at the bottom of the article.

Link - http://www.benhills.com/articles/sc.../138-caught-in-the-web-of-retirement-villages

Stangman.

 

[BayView]

Has anyone here had any experience with Retirement Villages?

Seems an absolute rip off to me.

My mother wants to move into an independent unit at a Retirement village because her current home of some 45 years is now too big for her to handle. The yard is too big and the place requires a reasonable amount of maintenance on a regular basis.

Sister has been taking mum to different Villages to see what is on offer. Mum has picked out the unit and Village that she prefers. So far so good.

Purchase price of the unit was quoted at $340K plus a weekly fee of $120 which covers Council Rates, Water Rates and Maintenance. OK with all that.

It is a new Retirement Village run by a "not for profit" !!?? organisation.

The reason I think it is a rip off concerns so called "Exit Fees". My understanding as it was explained is that for every year mum lives there they take 7% of the purchase price up to a maximum of five years. Mum negotiated this down to a purchase price of $318K, but in turn they will now take 7% per Annum for six years. Ouch!!!

What it boils down to is this- After 6 years of mum living there and after her departure and the unit is sold, after all exit fees and charges are deducted her Estate would receive back only 45% of the initial purchase price.
EDIT - I have been informed that 50% of the initial purchase price would be returned after a sale - not 45%

NOT the current sale price but her initial purchase price!!.

After doing a bit of maths this tells me that it is actually going to cost her $22,260 per annum ( 7% of $318K ) + $3,816 after rates from the weekly amount of $120.
This is a Total of $26,076 per annum or $501.46 per week for the first six years!!!!

Am I missing something or is this just a complete rip off?

Stangman.

One of our close friends is a Retirement Village manager - for private premises.

Don't kid yourself; the owners employ her to fill up beds, run a profitable ship...to make money.

The alternative is public nursing premises.

I started my nurse assistant stint working in one of those, before landing a gig in the ICU...

The differences are quite plain from private to public, mostly. Not that public isn't good; but not as good.

The problem is; private is more available when you need them, whereas the public ones might have no room.

 

[Angel]

Bayview, are you talking about a nursing home or a retirement village?

 

[TMNT]

so stangman, it seems like the only benefit to your mum in buying a setup like this would be to have similar neighoburs, is her paying all those ridicilous doulbe dipping fees worth having a bunch of neighbours who could easily move out or pass away?

why not save the extra $ and get her a nicer unit in a set of boutique units, or even 1-2 years old

 

[BayView]

Bayview, are you talking about a nursing home or a retirement village?

Different terms, but the end result is sorta the same - somewhere for the older folk to go when they can no longer look after themselves completely, and these facilities have different levels of care.

Retirement village would be very low/no care to maybe moderate..

In the most exact sense; the retirement village is more yer able-bodied person who is perhaps younger, and the nursing home is more acute care - 24/7 most cases.

My uncle and auntie moved to a retirement village a few years ago, and they were both perfectly healthy, but now they are struggling, but the care is there if needed - but only a lower level of care.

 

[beachgurl]

What does a retirement village have to offer that my Mum's complex doesn't? Please ask her: what does your Mum think is so good about retirement villages? I really hope she changes her mind.

My nanna has an emergency button in the bathroom and the loungeroom and she has a lanyard with a button on it that brings the nurse from the hostel down to their part of the village. She's had to use it a few times and the situation could've been much worse had she been living in a standard villa complex.

 

[redwing]

Hi Stangman

The in-laws were in a similar boat in that they purchased into a retirement village to downsize and enjoy the "village lifestyle". I'm not sure what the deal was with the strata/body corp fees but they were regular and increased regularly (beyond CPI)from what I was told. They still had to pay council rates, utility usage costs etc

The other fee was 3% of the sale price to go back to the managers for each year of ownership up to 10 years (so 30%). actually it was more like 2.5% as the other .5% went into the community sinking fund for repairs etc

Say you purchased a unit at 300k and sold in 10 years (apparently a normal holding period for these villages?) for $600k, you then have to pay the 30% of $600k back (-$180k), they also push for use of their manager to sell the unit and appeared to make it hard to use a local REA, or to sell yourself

The next person may purchase at $600k and when they sell they have to pay the 3% from $0 to the sale price (not worked out from the $600k purchase price, it re-sets again).

They discussed a number of issues

They had to pay for an on-site manager and A/Hrs staff, they also had to contribute to uniforms etc. A/hrs staff seemed to be uni students with a Snr First Aid as a minimum, though the girls would call the local security patrols A/Hrs if they had to attend a unit late at night, or early in the morning. The residents therefore had concerns about expediency, they then removed the oxygen from the a/hrs staff leaving them with only an AED and a First Aid kit.

There was a lot of politics, issues the residents had with on-site managers etc that took away from the village lifestyle they sought and gave the FIL a lot of stress and steepness nights, this eventually saw them sell up and leave

I had given the FIL Noel WHITTAKERS book "Living Well in Retirement" when he retired and a few years before he bought into the Village. He never read it until much later though and a number of issues such as he encountered are mentioned in that book

 

[redwing]

Big business is involved nowadays with Australia's biggest operator being Lend Lease Primelife, with 70 villages, Stockland have 62 villages

 

[Nemo30]

My nanna has an emergency button in the bathroom and the loungeroom and she has a lanyard with a button on it that brings the nurse from the hostel down to their part of the village. She's had to use it a few times and the situation could've been much worse had she been living in a standard villa complex.

When my nana still lived in her own home (in Adelaide), she had one of these. You dont need to be in a complex to use them. The lanyard worked anywhere within her property even outside.

There is lots of help available to elderly people in their own home - cheaper to be there than aged care. For a small fee my nana had people come and assist her nearly every morning. Her housework was also taken care of.
She's now in an aged care facility and hates it.

I agree with your thinking - buy a small unit close to everything she enjoys, but not in a complex.

 

[Stangman]

We really appreciate all of these contributions to the Thread. Many thanks to all of you. Please keep those replies coming. Hopefully it will help others in the future.

My mother already wears one of those emergency buzzers.

Going down to see mum shortly and will put all of the figures in front of her. May even show her this Thread. She rang a few minutes back and sounded fairly excited about it all. I hate to be the one to burst her bubble.

Thing is, mum does not mix with old people so I do not think her motivation is to be with old people - unless maybe she is feeling lonely. I think it is more to do with feeling secure within the complex. Could also have something to do with being near dad who is buried close by the complex. I know she visits him regularly. Not sure. There is also a shopping centre close by which would make it easier for her shopping.

My recommendation will be a small Courtyard home nearby, but at the end of the day it will be her choice. We will not make it hard for her if she is determined.

Not looking forward to the discussion with her.

Stangman.