Function of Government

The role of government is to create an environment for commerce to function whilst at the same time protecting retirees and particularly vulnerable retirees from both financial and emotional harm emanating from that function.

The Victorian Retirement Villages Act 1986 provides the environment for commerce to function but fails to fully protect retirees from financial and emotional harm as a result of it.

The Victorian legislative definition of a retirement village in demanding the payment of an 'in-going' amount without the transfer of property ownership is a major contributor to that financial and emotional harm suffered by retirees.

Thursday, 12 April 2018

Lendlease Retirement Village Payment Innovation

Lendlease Retirement Village Payment Innovation, the Weekly Source reports:-

"Following 12 months of testing, Lendlease has revealed its consumer choice of four retirement village contracts:

  • Traditional DMF – “Hold on to your cash now by deferring payment of fees until you leave the village”; 
  • Prepaid Plan – “Enjoy the certainty of paying the management fee upfront when you enter the village. Retain capital gain”; 
  • Refundable contribution – “Feel secure knowing your money is guaranteed and don’t pay a management fee – instead pay a higher contribution on entry that is refunded when you leave”; 
  • Pay As You Go – “Pay a monthly contribution rather than a lump sum management fee”. 

The detail on each plan.

Traditional DMF 
Average of 30-35% DMF on the resale price after seven years. 1-2% sales commission. $10-15,000 refurbishment fee with option to upgrade at between $50-70,000 to maximise resale price.

Prepaid plan
Pay an upfront fee of around 18% and receive 100% of the sale value when leaving the village (less reinstatement costs, selling costs etc). For example, a $500,000 DMF home will cost $590,000 upfront. After 10 years if it sells for $1 million the departing resident will receive the $1 million. Roughly one in five customers have taken this option over the 12 month test.

Refundable contribution 
Pay a higher ingoing contribution and Lendlease will provide a ‘money back guarantee’ on a set amount when you depart. An example is a $500,000 home may have a $650,000 guarantee when you leave, paid within 60 days. There are no selling fees at the end but you do pay an upfront establishment fee of 3% ($15,000 in this example). In addition to certainty for the family on the cash settlement, there is the certainty of funding residential aged care.

Pay as you go
Developed for customers (and their families) who may not wish to sell the family home or are managing their investment income. Still under the Retirement Villages Act, they will receive a lease (currently five years) and pay rent with no upfront payment and no departure fee or payment. The rent will be above the local market, reflecting the community facilities enjoyed and management support. They will also pay the same ongoing fees as the rest of the village residents on top of their rental fees. The ‘pay as you go’ alternative is currently only available for serviced apartments during the test phase but is intended to be rolled out to the wider village home market."

Read the full story here:- Lendlease Retirement Village Payment Innovation

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