OverSixty January 2023 Issue

17 DOWNSIZING OVERSIXTY.COM.AU | ISSUE 3 | JANUARY 2023 Moving to a retirement village – buy or rent? Deciding to downsize Should you stay or go? Ask yourself these questions first ZOË MEUNIER DOWNSIZING S ometimes, the biggest stress involved in downsizing is simply deciding whether or not to do it. There are many factors to take into consideration when it comes to such a major decision, including your current fami- ly needs, retirement plans and monthly cash flow. Are you feeling pressured to move – or stay – by family or friends? Only you can decide what’s best for your lifestyle and wellbeing, but asking yourself the following questions will help you to determine wheth- er downsizing is the path you want to take. How do your finances look? Will yoube comfortable financially if you stay in your current home for the next 5-10 years? If you’re finding it difficult to keep up with mortgage payments or are worried about whether you’ll have enough money to fund your retirement, downsizing to a less expen- sive home can ease those financial burdens. Are there unused rooms in your home? Unused rooms throughout your home create unnecessary work related to their upkeep. Downsizing your home could cut down on time spent cleaning underused areas. On the other hand, perhaps there is an option for you to section off this portion of your home and offer it as accommodation for friends, family or people in a similar life stage? Do you feel isolated? Having a large home just for yourself can The decision to downsize requires some reflection on how your life has changed and may continue to evolve Photo: Getty Images DOWNSIZING compound feelings of loneliness. Once again, this could potentially be alleviated by opening up your home as accommodation to others? Downsizing to a senior living re- tirement village or community could provide many more social interactions through daily events and activities. Are you an avid entertainer? You might want to think carefully about downsizing if you regularly host parties and get-togethers for family and friends, as your new dwelling may not accommodate gather- ings of the same size. Do you like gardening? If gardening is a chore or becoming a bur- den from a physical perspective, downsizing could relieve you of those tasks. On the other hand, if you’re an avid gardener who thrives on spending many hours tending to your hobby, you need to consider whether down- sizing will deprive you of this joy – or at least factor it into the next place you move to. Lifestyle investment After her husband died, Ishbel Noble, then 82, bought into a retirement village in Kingscliff, on the northern NSW coast, for an easier lifestyle near family. Up until her death in 2019, ownership of the village changed twice, and each time new management contracts were issued. “Ishbel was very happy there,” says daughter-in-law Julie Noble. “There was 24-hour staff for care needs and on-site services for unit maintenance. Exercises in the pool, chair yoga, and stretching classes kept her mobile, and she loved the social activities, bus outings, craft group, daily happy hour... She was never lonely.” But the monthly fees increased each year and though her estate handed back the unit (fully refurbished) in February 2019, it still has not sold and they continue to pay body corporate fees. It is currently on the market for $50,000 less than Ishbel paid for it. “Retirement communities are lifestyle investments not financial [ones],” says Julie. “If you go into it in that frame of mind and are willing to write-off the purchase price you will be quite comfortable in your latter years.” It’s not just the lifestyle you need to consider – choosing the best financial option for your circumstances is vital • There are more leasehold villages to choose from. The Cons • You don’t own the freehold title to your unit. • The lease is not regarded as an asset and therefore will not form part of your estate. The Costs Upfront costs Residents usually pay the market value of the lease, which is deter- mined by both the quality of the property and the services and facilities available at the village. Ongoing costs Leaseholders are bound to pay ongoing costs as outlined in the lease. These costs usually include fees for manag- ing the village and for providing services to all residents. Leaseholders will also pay utili- ty bills for their own unit. Exit costs A leaseholder’s estate will be expected to continue paying all ongoing costs, which can include any renovations and repairs, until the unit is rented to a new person. Be sure to check statutory limitations in your state. LOUISE WATERSON DOWNSIZING M oving into a retirement village offers the chance to become part of a new community, while living in age-appropri- ate housing, built with safety and wellness in mind. According to the Property Council of Australia, over 189,000 Australians live in retirement villages. Deciding whether to pur- chase or rent a unit in a retirement village will have different implications. Here are some important pros and cons to consider. BUYING Strata-title only retirement villages require residents to become owners of their units. With ownership, comes responsibilities and rights, much like when you purchase a unit in any apartment complex. This means res- idents automatically become a member of the retirement village’s body corporate (aka ‘registered interest holders’) and can vote on matters impacting all unit owners in the re- tirement village. While the retirement village operator usually acts as the strata manager and will be responsible for: • managing the common property in the vil- lage (such as the grounds and other common area facilities); and • providing elderly care-related services (such as emergency medical, transport and/ or personal services). The Pros • You enjoy voting rights on how the retire- ment village is managed, as well as on any- body corporate matters that may arise. • As owner of the unit, you and your estate have freehold title rights to sell it at market value in the future, once any exit costs have been settled. The Cons • The upfront costs are higher than renting. • You can be obliged to vote on body corpo- rate/owners’ corporation matters. • You or your estate will be charged body corporate fees up until the unit is sold, which may involve longer delays than you would like. It’s especially important to be aware of all the exit fees. Is the retirement village manager the only selling agent? Does the kitchen and bathroom need to be renovated before selling? The Costs Upfront costs Owner residents pay an up- front lump sum that covers the price of the unit plus stamp/transfer duty and legal fees. Ongoing costs Owner residents pay ongoing levies to the body corporate for management costs and residents’ services. Owners may also pay council rates and utility bills for their own units. Exit costs The strata title owner (or their es- tate) will usually be charged an exit fee when the retirement village accommodation is eventually sold. This fee amount depends on the terms and conditions of the purchase agreement, and usually includes a percent- age to cover the costs of marketing and sell- ing the accommodation, as well as any re- pairs or renovations that may be necessary. LEASEHOLD Leasehold retirement villages allow residents to pay for a long-term or lifetime lease on a unit. In this instance, the retirement village owner remains the owner of the unit. If the village is sold, the lease remains intact. The lease may include a services agreement that details the services the renter is entitled to receive, or this may be detailed in a separate agreement. Generally, the lease automatical- ly ends upon the death of the leaseholder. The Pros • You have long-term, exclusive right of pos- session of your unit. • Compared to a strata-title ownership, the upfront entry cost is much lower. Leasehold retirement villages allow residents to pay for a long-term or lifetime lease on a unit There are positives and negatives to both purchasing and leasing a retirement home, so go in with your eyes open Photo: Getty Images DOWNSIZING A move into a retirement village provides the opportunity to join a new community