Seniors need choice not protection
Fairfax Media | The Senior News
MORE than 184,000 people live in retirement villages and the overwhelming majority are happier than they were before they made the move.
The Retirement Living Council says in a 2013 survey of 5000-plus residents, more than 90 per cent reported their social life had improved or stayed the same since their move to a village, and 90 per cent believed the move had been a good financial decision.
Of recent buyers, 83 per cent regarded their fees as 'moderately reasonable' to 'very reasonable', and 70 per cent said their cost of living was the same or less than their previous family home.
If they had their time over to make the same choice to move, 98 per cent said they would do it.
Retirement living specialist Rachel Lane says seniors need choice not protection, and talk about protecting seniors by abolishing deferred management fees could cause more harm than good.
"It's important to understand what the deferred management fee is before we start calling for it to be abolished," she said. "The deferred management fee is essentially the retirement village operator's profit.
"They are not allowed to profit from the ongoing service charges and they choose to keep their up-front prices low so it is attractive to people to buy. So basically the deferred management fee is compensation for the low purchase price and running the village at cost."
Ms Lane said if the government abolished the fee, thousands of people would be unable to afford retirement village living. "I would go as far as to say that prices could double overnight."
Ms Lane, the principal of Aged Care Gurus, which provides financial and legal advice about aged care, retirement communities and home care, said the deferred management fee was a 'vital ingredient in providing affordable housing'.
"Some villages charge a deferred management fee of 100 per cent - which some people find shocking - but percentages are not relevant.
"One hundred per cent of $100,000 is cheaper than 30 or 40 per cent of $450,000-and if someone only has $100,000 to spend then $450,000 is completely unaffordable.
"Plenty of seniors can afford to pay the 'real price' of these retirement village units up front- if the retirement villages would let them," she said.
"A parliamentary inquiry into the seniors housing sector in Victoria ran for more than 12 months last year and as a result 15 recommendations were made to parliament including that retirement villages will need to give residents the choice of purchasing a unit with or without a deferred management fee."