16 October 2017
 Categories: , Blog

A retirement village is basically a managed neighborhood for seniors, even though you do not essentially have to be a retiree. Living in a retirement village allows seniors to downsize and enter a new residence that's better suited to their elderly lifestyle as well as financial circumstances. Generally, there are three types of occupancy or ownership contracts, namely strata title, leasehold and rental agreement, that are common with retirement villages in Australia. So how do you make the ideal choice? Read on for more insight.

Strata title 

In a strata title retirement community, each resident owns a particular unit in the village and hold a title certificate for that specific lot. Under this type of agreement, you will initially pay an agreed purchase price directly to the owner. Additionally, the contract also stipulates that you part with the owner's corporation fees during your time of tenure. Any section of the village neighborhood that is not part of the allocated lots is referred to as common property and includes communal facilities and pathways in the community. As such, all the lot owners have the right to access and use it.

Owners of strata title lots have the liberty to sell their respective lots although they may have to share the sale profits with the operator and this can take away a huge chunk of the sale proceeds. Generally, a strata title makes it easier to raise finance.

Leasehold

Under the leasehold agreement, each resident is required to make both initial and continuing payments which afford them a lease to reside in the village. What's more, residents are also expected to make monthly or quarterly payments for maintenance services, which can accrue to significant sums at the end of the year. With leasehold agreements, there's no stamp duty, which lowers down the ongoing fees to a resident.

Bear in mind that a lease doesn't afford the residents any ownership rights which means sourcing for finance is often a monumental task. Only when the lease is non-participating does it mean that the outgoing resident is not obliged to share with the owner part of the proceeds obtained from the transfer of the lease.

Rental

Unlike strata title and leasehold contracts, the rental option won't cost you dearly in maintenance and departure fees. Under the rental agreement, each resident pays a rental fee for their respective unit. You may also be exempted from administration fees, water rates or municipal rates, which is cost effective every year.