The great retirement village deception, the use of words like 'buy' and 'purchase' deceive the retiree
into believing an exchange of ownership will take place. In fact the retiree has merely made a 'loan' to the operator at 0% interest. This loan on far too many occasions is equivalent to or near to equivalent to the purchase value of a similar standard unit with the generally community.
The loan has three key features all detrimental to the retiree,
- Village residents can lose as much as 40% of the original 0% loan amount through a poorly named 'Deferred Management Fee', this fee is accumulated over the initial years of occupancy.
- Inflation over the period of occupancy can devastate the $ value of the refundable amount of the original loan. (The refundable amount being the value of the initial loan minus the value of the deferred management fee.)
- Outgoing residents can wait weeks, months to get back the refundable portion of their loan after their departure from the village.
Loan/Lease Retirement Village - Resident Funded – 74% of the marketplace
- Development of the village funded by the retirees with 0% loans to developer/owner.
- Retiree loans a $ sum, in the order of a 'buy' price, at 0% interest to the developer/owner in exchange for conditional occupancy, not ownership.
- Village residents despite only occupancy not ownership, pay all the management costs, maintenance costs, municipal rates, renovation costs, selling costs.
- Village residents despite only occupancy not ownership, can lose as much as 40% of the original 0% loan amount through a poorly named 'Deferred Management Fee', this fee is accumulated over the initial years of occupancy.
- The shorter the occupancy period the more devastating the Deferred Management Fee becomes on the $ amount of the refundable portion of the 0% loan.
- The longer the occupancy the more devastating inflation becomes on the $ value of the refundable portion of the 0% loan.
- In the order of 50% of developers/owners deny retirees access to any unit capital gain.
- Enforced by legislation retirees can wait weeks, months to get back the refundable portion of their loan after their departure from the village.
