Diligent research of retirement villages will find that the exit fee – buyback – has historically been an adverse issue for residents.
The exit fee, also known as the deferred management fee or departure fee, is the amount the resident in the retirement village has to pay when he or she permanently leaves the village.
The fee is paid to the village operator and is usually deducted from the sale price of the unit. State governments impose a time limit on when the exit fee is paid.
The latest PwC Property Council Retirement Census showed that 52% of contracts are offering residents a buyback in a shorter period than the imposed limit.
This payment is often a percentage of the ingoing fee, or the sale price, and is agreed to in the contract signed before entering the village.
With the average age of people moving into a retirement village being 75 and the predominant reason for leaving is to move into residential aged care (44%) the exit fees are a key part of the contract.
It is imperative a prospective resident seeks financial advice before signing any contract and all prospective residents must be aware of what is offered and what you will receive when it is time to leave.
According to the PwC Property Council Retirement Census the average stay is 8.7 years.