Retirement villages are a great option for people who want a degree of independence in retirement but with the added benefits of communal living.
There can be significant differences between retirement villages in terms of facilities and costs, and it pays to do your homework before signing an agreement. There are fourlegal titles commonly used for retirement villages: licence to occupy, unit title, cross lease and lease for life. The type of title will largely determine how much it costs you to live in your unit.
There are three types of costs: The initial cost of buying the unit, the costs of living in your unit, and the costs involved with selling.
In many cases, the initial amount you pay gives you the right to live in your unit, but does not buy the unit itself.
While you are living in the village, you need to make regular payments to cover expenses such as rates, gardening, maintenance and healthcare.
There are differences between villages with the ongoing fees.
When you sell your unit, you may have to pay for refurbishment to a certain standardand marketing and selling costs.
In some cases, you may have no control over the sale process and when you sell, you may not get the benefit of any capital gain.
Before you purchase, the retirement village must give you certain legal documents which set out your rights, benefits and costs, and you are required to get independent legal advice on these before signing an agreement.
To find checklists for buying a unit in a retirement village, go to: www.sorted.org.nz.
Liz Koh is a financial adviser, based in Paraparaumu. Her disclosure statement can be obtained free of charge by calling: 0800 273 847. Author of Your Money Personality; Unlock the Secret to a Rich and Happy Life. She can be contacted on email: liz.koh@moneymax.co.nz or view: www.moneymax.co.nz
