Retirement Villages - Do I have to pay an exit fee on top of the in-going contribution?
Updated: Jun 30, 2019
As a result of the recent media reports in relation to retirement villages and residence contracts, there has been increased confusion about some of the main amounts required to be paid when moving in and out of a retirement village. One main question that arises is in relation to the in-going contribution and the exit fee or deferred management fee and whether those are two separate payments that are required to be made. Whilst the two payments differ and are payable at different times, the practicality of how they are paid is not as simple and varies depending upon whether you hold your unit under a licence, lease or purchased under a freehold contract. The in-going contribution is the amount paid by a resident to an operator, for their right to reside in the village. The in-going contribution is often payable as an interest free loan, which is then returned to the resident or their family when they leave the village. From this amount, the deferred management fee or exit fee is deducted. That is, the resident is not out of pocket for the exit fee when they move into the village, rather, it is deducted from the refund of the in-going contribution.
The idea behind the in-going contribution and exit fee structure, is that residents can afford to reside in an area they like for a lower price than a free-standing house would cost in the same area. This means that residents can use their hard-earned savings to enjoy their retirement, rather than to have to put much of their funds into real estate. In addition, retirement villages are purpose built and provide services and facilities that you would either have to forgo in your own house or pay a provider to offer to you. If you are looking to make the move into a retirement village, contact us on 07 3088 7925 or firstname.lastname@example.org to see how we can help you.