Retirement - what are your property rights?

If you're retiring, deciding to sell the family home and move into a retirement village can make financial sense – but it's a decision that needs to be considered carefully.

Retirement villages can have financial and lifestyle benefits for seniors, but not all villages or tenancy agreements offer the same rights and privileges to residents. Researching the options in your area and talking to conveyancing solicitors could help you to find the living arrangement that suits your needs and your price range.

Should you rent or buy?

The biggest decision to make when choosing retirement living is whether you want to own or rent your new home. Both options have their pros and cons, depending on your personal circumstances and the level of flexibility you need.

Renting a property

If you don't know how long you'll be living in one location and you want the freedom to leave, renting could be the better option. However, not all retirement villages offer rental accommodation and these are sometimes only offered to people with limited means following an income assessment.

The common types of rental arrangements are:

• Leasehold arrangement – you lease a unit from the village operator and make payments based on the property's market value.
• Loan and licence arrangement – you pay rent for a unit based on a calculation of the current age pension and rent assistance.

Buying a property

If you've raised enough money through savings or selling a home, buying could give you more financial security later in life. Downsizing your home to a smaller unit can mean a more manageable mortgage that could be paid off sooner.

The rights you have as an owner depend on the type of ownership arrangement (tenure) you have. The most common types of tenure are:

• Leasehold estate – you pay the full market value to lease the property from the owner or developer for an agreed period, usually between 49 and 199 years.
• Licence to occupy – you are licensed to occupy the property if you agree to certain conditions, such as not making alterations.
• Company share arrangement – you purchase shares from the developer in exchange for occupancy.
• Strata or community title ownership – you become the owner of the unit or lot and a member of the owners' corporation or community association.

Ongoing costs to be aware of

When you're comparing loan or rental rates to find the best match for your finances, it's also important to know about the other costs you'll have to pay. These usually include service charges or maintenance fees for village amenities, utility bills and sometimes council tax, although some villages are exempt. You may also be charged fees if you leave the property.

Check residents' handbooks or talk to conveyancing firms to find out what you'll have to pay. It's important to note that aged care is not usually included in retirement village packages, even if these facilities are offered on site.

What rights do retirees have?

Depending on the lease or purchase arrangement you have, you may be a registered interest holder or non-registered interest holder. Registered interest holders usually have more flexibility and independence when it comes to their properties, but they also have to pay additional costs if they leave the property.

In New South Wales, the rights of retirement village residents are protected by the Retirement Villages Act 1999 and Regulations. Legal disputes can be brought to the Retirement Village Residents Association NSW & ACT (RVRA) or you can talk to property lawyers who specialise in conveyancing for seniors.

For more information about how to sell your home and prepare for retirement, read our free ebook: 'Downsizing your home: selling and downsizing tips for seniors.' Click the image below to get your free copy.