Are you thinking of moving into a Retirement Village? Maybe your garden is getting on top of you, or you don’t want to be worried about fixing the hot water cylinder again. Retirement Villages can offer you peace of mind that someone else will take care of these problems for you. But is there a catch?

When you move into a Retirement Village you enter into an Occupation Right Agreement (“ORA”). An ORA gives you the right to live in the unit that you have signed up for, but it does not give you any property rights in that building or land. You have the right to live in the building as your home, but you don’t have the right to sell your unit, mortgage your unit or, in most cases, rent your unit to someone else.

The Retirement Villages Act 2003 and supporting regulations and rules lay down benchmarks that all Villages have to adhere to, but each ORA will be specific to the Village and may even be specific to you.

ORAs can seem intrusive as they can govern your right to have pets, guests, and even where you hang your washing. However, they also give you peace of mind that your neighbours are being governed by similar rules. Maybe spend some time thinking about whether regulated community living is something that is going to suit you or not.

It can be very helpful that your family understands why you are moving to a Retirement Village, especially because misunderstandings often occur about the financial implications of an ORA. What you pay for your Village apartment/home is not what you will get back when you move out. Entering into an ORA is not a good way to invest your money if you want to make a return:

1. You will need to pay a weekly fee for the length of your ORA. This covers communal spaces, rates, staff, and maintenance of the Village. Some Villages give you the option of a fixed fee for the whole time you have your ORA and some will offer a fee that will be reviewed and adjusted annually. A fixed fee will typically be higher than a reviewable fee to start with, but it provides greater long-term certainty about your costs.
2. You will be charged a fee when you end your ORA. This fee, often known as a Deferred Management fee, will accumulate over the time of your ORA and will reach a cap around 20% to 30% of the price of your ORA.
3. When you end your ORA your purchase reimbursement fee (minus the Deferred Management Fee mentioned above) won’t be paid back until the Retirement Village finds a new person to take over the ORA for your unit. This can take months.
4. Some Retirement Villages will require you to continue to pay the weekly fee until a new ORA is found for your former home.
5. Some Retirement Villages also charge other fees for administration or marketing.

When you end your ORA there will be a delay until you (or your Estate if you pass away while you have your ORA) will receive any funds back that you are owed.

An ORA is a lengthy document, and you will be required to see a lawyer before you sign. This appointment with your lawyer should take some time as you go through the ORA in detail. It’s helpful to bring your questions with you to the appointment and try to choose a time of day when your concentration is at its best.