Best Retirement Village Fix

Best Retirement Village Fix-Ban the Deferred Management Fee model-Legislate to simply buy or rent-Retiree retains capital making them better placed to fund their own Aged Care not rely on taxpayers. #auspol @richardmcolbeck @JulieCollinsMP @HelenHaines1 #agedcarerc @neighbour_s pic.twitter.com/VOhyzDZAli

— Les Scobie (@retvilldotnet) July 8, 2019

ABC 7.30 Report Highlights Retirement Village Issues

ABC 7.30 report highlights on-going issues with #retirementvillage industry https://t.co/xpQ7XeFxKF Lots of political claims of 'we have taken action' but little meaningful change has really happened. Deferred Management Fee model should be outlawed, you either own it or rent it.

— Les Scobie (@retvilldotnet) June 19, 2019

Cost Of Leaving A Retirement Village

The ABC 7.30 Report has drawn attention to continued problems within the Retirement Village Industry.

Emphasis was drawn to the much maligned Deferred Management Fee and the lack of meaningful consumer protection available to residents when something goes wrong in their village.

Take the link below to watch the full story.

https://www.abc.net.au/7.30/the-cost-of-getting-out-of-a-retirement-village/11226126

Deferred Management Fee Fails Retirees

As the entry cost to lease a unit in a #retirementvillage moves closer to the purchase cost of a commensurate unit within the general community, the greater the Deferred Management Fee model used by the industry fails retirees. #vicpol @MarleneKairouz @michaelobrienmp @abc730 pic.twitter.com/UyzN5cAnnX

— Les Scobie (@retvilldotnet) May 16, 2019

Retirement Villages In Words and Pictures

A summary of the Retirement Village industry in words and pictures. @acccgovau #auspol @KenWyattMP @ScottMorrisonMP @Bowenchris @billshortenmp @abc730 @TaniaMaxwell14 @TerpsMLC pic.twitter.com/iuUf1wozsp

— Les Scobie (@retvilldotnet) March 23, 2019

Retirement Village Deferred Management Fee Should Be Restricted

Deferred Management Fee for #retirementvillages should be restricted to not for profits + regulated entry price to property value ratio that reflects an entry price discount commensurate with the DMF percentage. @GladysB @michaeldaleyMP @Matt_KeanMP @smh #nswpol #NSWVotes2019 pic.twitter.com/dCXp8egZA2

— Les Scobie (@retvilldotnet) March 14, 2019

Silent Killer of Retiree Capital Wealth

Retirement Village Deferred Management Fee model is the silent killer of retiree capital. Note the disparity of two different retirees after 10 years = $625,000.00. #retirementvillage retirees will be more dependent on families or the taxpayer to fund their own aged care. #nswpol pic.twitter.com/JLgbTkO5cP

— Les Scobie (@retvilldotnet) March 8, 2019

Deferred Management Fee Really Paid On Entry

#retirementvillage Deferred Management Fee paid on entry - The industry charges an in-going amount on entry for a lease not ownership then claims you don't pay DMF until exit. Hello, you paid it on entry. No cheque is written on exit. @MarleneKairouz @michaelobrienmp @consumervic pic.twitter.com/pYvAEJbtcF

— Les Scobie (@retvilldotnet) December 9, 2018

Retirement Village Deferred Management Fee

Why the Deferred Management Fee retirement village model should no longer exist. Dramatic capital value reduction not because the housing market crashed just because the retiree unknowingly chose to live in a #retirementvillage. @acccgovau @ACurrentAffair9 @abc730 @MarleneKairouz pic.twitter.com/jfxiI8OgRq

— Les Scobie (@retvilldotnet) November 30, 2018

Retirement Village Rort Greatest Untouched Consumer Issue

Professor Fels described the retirement village rort as the greatest untouched consumer protection issue of this century and called for urgent enforcement action from governments and regulators. Is anybody really listening? https://t.co/lcpxSwLWXn

— Les Scobie (@retvilldotnet) November 25, 2018

Retiree Advises Stay At Home

‘Stay home’: Warning about buying into retirement villages https://t.co/uxSwvrpArT - When will legislators stop being seduced by the industry machine and actually do something about it. @acccgovau @ACurrentAffair9

— Les Scobie (@retvilldotnet) November 23, 2018

Deferred Management Fee Should Be Restricted

The Deferred Management Fee for #retirementvillages should be restricted to Not For Profits inclusive of an entry $ discount to property value ratio that reflects the DMF fee % @adele_ferguson @MichaelWestBiz @amy_bainbridge @MichaelPascoe01 @AlanKohler #auspol #acccgovau @sdanck pic.twitter.com/3WP7XoN6hA

— Les Scobie (@retvilldotnet) October 23, 2018

Falling Property Price Danger For Retirement Villages Residents

Flat or falling property market holds greater danger for #retirementvillage residents in their ability to fund their own aged care. Royal commission needs to examine budgetry impact. @KenWyattMP @ScottMorrisonMP @GregHuntMP @Bowenchris @billshortenmp #royalcommission #auspol pic.twitter.com/5la7gtC5tL

— Les Scobie (@retvilldotnet) September 18, 2018

Deferred Management Fee Harm For Retirees

#retirementvillages - A product where you do not know the cost until the end - The deferred management fee pricing mechanism is grossly unfair on retirees as it can no longer represent a real discount on entry cost. @LidiaThorpeMP @MarleneKairouz @MatthewGuyMP @heidivic #vicpol pic.twitter.com/SBVkagQBQ4

— Les Scobie (@retvilldotnet) September 4, 2018

Retirees Negative Financial Destiny

This is the financial destiny for most retirees living in #retirementvillages - Proposed legislative reforms will not stop this - Capital wealth from a lifetime of hard work gone to private enterprise pockets, paid to just occupy not purchase @M_McCormackMP @AlanKohler #auspol pic.twitter.com/sOj5Uq7Qhf

— Les Scobie (@retvilldotnet) August 16, 2018

Financial Pain for Retirees from Retirement Villages

New table shows the complexity and the financial pain for retirees in retirement village living, the loss of capital value over the occupancy period is devastating. The Legislation & Deferred Management Fee model masks this from retirees until it is too late. @acccgovau @sdanck pic.twitter.com/sulPBzfkxS

— Les Scobie (@retvilldotnet) July 30, 2018

Deferred Management Fee Business Model Broken

A #retirementvillage Deferred Management Fee should reflect a discount between entry cost and value of a commensurate property. It no longer does, retirees pay an entry price commensurate with an ownership price but receive only conditional occupancy. Practice should be outlawed. pic.twitter.com/yVyVtReVeq

— Les Scobie (@retvilldotnet) August 11, 2018

Residential Tenancy $ Outperforms Retirement Village $

For retiree accommodation, a standard residential tenancy can outperform a retirement village in pure financial terms.

At the 7 year mark the retirement village industry average occupancy period, the example below shows the retiree in a residential tenancy is $241,471.00 dollars in front of the retiree in the retirement village.

Such is the upfront pain in the Deferred Management Fee model used by the industry, it takes over 17 years for the retiree in the retirement village to draw level in financial terms.

There are aspects to life in a retirement village the retirees value that do not have a definable $ value, on the flip side retirees must pay for facilities etc. that they do not use.

Retirement Village Financial Pain

The retirement village financial pain shows clearly in this table prepared by www.retvill.net , especially when it is compared to a standard residential tenancy.

In the table below four different retirement village payment models are examined and compared. All are measured by the loss of capital value over the period of the occupancy.

It must be noted that retirement villages generally offer recreational and social facilities to their residents together with conditional security of tenure. These are not generally available with a standard residential tenancy within the community. What is striking in the analysis however is the cost of this over and above the market driven cost of a residential tenancy generally.

All retirement village examples have the common parameters of an $800,000.00 entry cost with a Deferred Management Fee rate of 36% drawn over the first four years of occupancy, devaluation of the refundable amount (entry price minus the DMF and held by the operator until departure) at a cpi rate of 2.5%pa, a maintenance charge of $150.00 per week at in-going with an annual cpi increase of 2.5%pa, a unit refurbishment charge of $50,000.00 at in-going with an annual cpi increase of 2.5%pa.

Retirement village maintenance fees, devaluation of the refundable amount over the period of the occupancy and refurbishment costs are including in the analysis. The retirement village resident does not gain ownership of the property, only a lease or licence to occupy. The most direct comparison to this style of retiree accommodation in relation to overall financial impact is a standard residential tenancy within the general community.

The five different retiree accommodation models are:-

• Residential Tenancy - Rental return to landlord 5% with a 2.5%pa capital gain. 3%pa investment return to tenant on their retained $800,000.00.                       
• Retirement village residents
• RED - Deferred Management Fee calculated on the ENTRY price. 100% of the capital gain to the RESIDENT.                                                                                        
• GREEN - Deferred Management Fee calculated on the EXIT price. 100% of the capital gain to the RESIDENT.                                              
• YELLOW - Deferred Management Fee calculated on the ENTRY price. 100% of the capital gain to the OPERATOR.                                        
• BLUE - Deferred Management Fee calculated on the EXIT price. 100% of the capital gain to the OPERATOR.                                                

At the SEVEN (7) year occupancy mark (industry average period of a retirement village occupancy) the capital value of the retiree has fallen from $800,000.00 to:-

• Residential Tenancy - $682,002.00 - A loss of 26%.     
• Retirement village residents
• RED - $428,628.00 - A loss of 55%. 
• GREEN - $383,797.00 - A loss of 60%.
• YELLOW - $304,096.00 - A loss of 62%.
• BLUE - $259,264.00 - A loss of 73%.

At the FIFTEEN (15) year occupancy mark (industry average period of a retirement village occupancy) the capital value of the retiree has fallen from $800,000.00 to:-

• Residential Tenancy - $529,097.00 - A loss of 53%.     
• Retirement village residents
• RED - $331,865.00 - A loss of 71%.
• GREEN - $251,171.00 - A loss of 78%.
• YELLOW - $107,716.00 - A loss of 87%.
• BLUE - $ 27,022.00 - A loss of 98%.

At the TWENTY FIVE (25) year occupancy mark (industry average period of a retirement village occupancy) the capital value of the retiree has fallen from $800,000.00 to:-

• Residential Tenancy - $308,712.00 - A loss of 79%.     
• Retirement village residents
• RED  - $  89,055.00 - A loss of 94%.
• GREEN - $      0.00 - A loss of 100%.
• YELLOW - $-167,128.00 - A loss of 121%.
• BLUE - $-259,354.00 - A loss of 117%.

Table.

Retirement Village Operator Breaks Ranks

Retirement Village Operator Breaks Ranks - The Sydney Morning Herald reports:- Retirement Village Operator Breaks Ranks Over Contracts 

"Lendlease is breaking ranks with the other big retirement village operators to introduce payment options with no exit fees.

Lendlease, Aveo and Stockland – the three biggest operators of retirement villages – have traditionally cleaved to a model whereby the resident pays less up front but the operator claws back a hefty “deferred management fee” when they leave.

Lendlease has now introduced a choice of four financial models at 15 of its 71 retirement villages, with plans to extend them across the board after market feedback. Lendlease would still offer its existing contract, whereby a person buys a unit then pays a deferred management fee at the end. 

The three new options include a pre-paid plan, a refundable contribution and a pay-as-you-go model."

Read the full story here:- Lendlease breaks ranks over RV contracts

Retirement Village Operator Breaks Ranks