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HealthInfo Canterbury

Retirement and lifestyle villages

When it comes to thinking about moving into a retirement or lifestyle village one of the most important things to remember is to take your time and consider the options carefully. If you do this you're likely to be one of the many residents of lifestyle villages who report that moving into a village was one of the best things they've ever done.

The term "retirement village" or "lifestyle village" broadly covers a purpose-built complex within a community setting, designed to cater to those 55+ years old. Whatever your needs, you are likely to find a village that suits you. This article covers those complexes that are required to register as a retirement village.

Some of the reasons people consider a move into a retirement village are a desire to meet new people, needing to downsize the family home, a desire to live in a more supportive environment, seeking an increased feeling of security and wanting to participate in a community lifestyle. A village will likely address many of these concerns. (Perhaps you have similar reasons for moving but you don't want to move to a village. There are other options.)

Think carefully about what you need now and what you may need in the future. The internet also has lots of information – a good starting point is www.eldernet.co.nz. Check the village is registered, registration gives you additional protection under the Retirement Villages Act (2003) [The Act].

You may decide you'd like an official tour of the village, or that you'd like to look around by yourself. Ensure you visit a village more than once before you make a decision. Meet the people you will have contact with in the village – this may include the village owner, the village manager and other residents. Find out if there is a regular social event or meeting and ask if you can come along and see if the village community feels like a place you would want to be a part of. At some villages staff have quite an active role in activities, while at others they have less.

Villages vary greatly – you'll notice different sized villages; from very few units to some with hundreds; newer villages and older villages. You will discover that the community facilities available at each village can vary, with some offering a wide range of services such as a swimming pool, bowling green, caf├ęs, and so on, and others that may only have a basic village meeting room. But the differences are not just those you can see. Find out about the ownership structures as these are varied: for example, limited liability companies, trusts and not-for-profit charities. Ownership may impact on the way the village is run on a day-to-day basis.

Buying into a retirement village is a complex legal arrangement. (We use the terms "buy and purchase" as there is an exchange of a capital sum – make sure you know what you are buying as it is uncommon to actually own your unit.) The terms and conditions of your right to live in the village are explained in an Occupation Right Agreement (ORA) a legally binding agreement. These are different from village to village, so make sure you understand the one for the village you're intending to enter. You are required to obtain specialised, independent legal advice before "purchasing". (Note: The associated legal fees may be more than for a standard property transaction.)

If you intend to purchase, the village operator will supply you with a number of documents – a Code of Residents Rights (outlining your basic rights as per The Act), the Code of Practice (which sets out the minimum requirements that need to be covered by your ORA), a Disclosure Statement and the relevant ORA. Each of these documents is important and contains essential information.

The Disclosure Statement will outline the type of investment or legal title you are purchasing and the costs associated with living in the village. It will also cover other key information. Some of the terms you may see could be a Licence to Occupy (LTO), Lease for Life, Unit Title or Cross Lease. It is important that you understand the differences.

Consider your budget when you move into the village. All villages have a number of costs associated with them. What do the fees cover and how often are they changed? If they increase over time can you continue to afford them? Do you pay these fees if you are away – on holiday or in hospital? Your village fees will often include some insurance, ensure you are happy with the amount you would be paid should any number of unforeseen events come to pass; you will often need to pay for your own contents insurance. You will also need to plan for your regular outgoings that are not covered by village fees (power, telephone, pay-for-TV, and so on). You may still be eligible for government financial assistance (benefits) if you live in a village.

There are costs associated with leaving a village (and sometimes when transferring within one). In most villages you can expect to exit the village with less capital than you invested. You also need to look at the process of sale once you no longer require your unit. Can you (or your estate) have some say in the sales process? When will you (or your estate) receive any payment? What if there are delays? It is worth noting that if you enter a village and change your mind about village living you will need to purchase back into the marketplace. Do you have a contingency for this?

Once you have signed a contract you have a 15-day cooling off period which allows you to cancel if you change your mind. If you involve your key support people and do your research well you should find that once this time passes you will remain happy with your choice.

Developed from Care Publications "Where from Here" Page created March 2012.

  HealthInfo recommends the following pages

Eldernet – www.eldernet.co.nz

Sources

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Review key: HIRRV-48277